GAQC Alert No. 249 

GAQC Alert
New Pension-Related Auditing Interpretations Issued and AICPA Volunteer Opportunities
April 22, 2014
GAQC Alert #249
In This Alert
New Governmental Pension-Related Auditing Interpretations
Status of Additional Pension – Related Guidance
AICPA Volunteer Committee Applications Due May 15th
Register for GAQC Pension Web Event Series
See GAQC Alert #248 for registration information about the upcoming GAQC Web event series on GASB's new pension standards. The first event, The GASB's Pension Standards Part I: Considerations for Cost-Sharing Plans, Participating Employers, is on Tuesday, May 6, 2014. The second event, The GASB's Pension Standards Part II: Considerations for Agent Plans and Participating Employers, is on Wednesday, May 7, 2014. Both events will be held from 1:00 PM - 3:00 PM (Eastern Time).
Register for Annual Required Webcast
The annual GAQC required Webcast titled, GAQC Annual Update, will be held on Tuesday, April 29, 2013, from 1:00PM - 3:00PM (Eastern Time). The Webcast will provide participants with a summary of the key issues that GAQC members should be considering as part of planning for the 2014 audit season. Read GAQC Alert #246 for details and registration information.
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Dear Center Members
The purpose of this GAQC Alert is to announce the issuance of three auditing interpretations relating to issues and questions associated with the implementation of the soon-to-be effective pension standards issued by the Governmental Accounting Standards Board (GASB) and to make our members aware of several volunteer opportunities at the AICPA that may be of interest to Governmental Audit Quality Center (GAQC) members.
New Governmental Pension-Related Auditing Interpretations

As noted in GAQC Alert #244, the AICPA State and Local Governments Expert Panel (SLGEP) has been engaged in numerous and complex discussions regarding accounting and auditing implementation issues facing governmental pension plans, the governmental employers that participate in those plans (employers or participating employers), and their auditors as a result of the GASB's new pension accounting standards. GAQC Alert #244 announced the availability of two whitepapers addressing issues pertaining to both the auditors of cost-sharing multiple-employer plans (cost-sharing plans) and participating employers. Those whitepapers can be accessed on the new GASB Matters section of the GAQC Web site.

Since the issuance of the whitepapers, the SLGEP has been working with the AICPA Audit and Attest Standards Team on several auditing interpretations which were just issued in final form. All of the interpretations can be accessed on the Audit and Attest Standards Team's Web page titled "Recently Issued Audit Interpretations." The following includes a brief summary of each interpretation and provides direct links.

Interpretation to Audit Evidence Standard. Interpretation No. 2, "Auditor of Participating Employer in a Governmental Cost-Sharing Multiple-Employer Pension Plan," of AU-C section 500, Audit Evidence, answers two questions. The first clarifies that the audited financial statements of a cost-sharing plan prepared in accordance with generally accepted accounting principles (GAAP) and certain additional unaudited information from the plan would not provide the employer's auditor with sufficient appropriate audit evidence regarding the employer's pension amounts. The second clarifies that if the plan has prepared various schedules and engaged its auditor to audit and report on those schedules based on the best practice recommendations in the AICPA's SLGEP whitepaper, Governmental Employer Participation in Cost-Sharing Multiple-Employer Plans: Issues Related to Information for Employer Reporting, the employer auditor could utilize the report of the plan auditor as audit evidence.

Interpretation to Specific Elements of Financial Statements Standard. Interpretation No. 1, "Auditor of Governmental Cost-Sharing Multiple-Employer Pension Plan," to AU-C section 805, Special Considerations—Audits of Single Financial Statements and Specific Elements, Accounts, or Items of a Financial Statement, answers two questions. First, it discusses the type of report the plan auditor may issue (and provides an illustration) if engaged to audit schedules that are prepared by the plan as described in the AICPA's SLGEP whitepaper, Governmental Employer Participation in Cost-Sharing Multiple-Employer Plans: Issues Related to Information for Employer Reporting. Second, it addresses the issue of materiality when the plan auditor is engaged to opine on such schedules.

Interpretation to Group Audits Standards. Interpretation No. 1, "Auditor of Participating Employer in a Governmental Pension Plan," to AU-C section 600, Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors), clarifies that it would not be appropriate for the employer auditor to make reference to the audit report of the governmental pension plan auditor solely for purposes of GASB Statement No. 68, Accounting and Financial Reporting for Pensions—an amendment of GASB Statement No. 27, because, in this circumstance, a governmental pension plan is not a component of the employer. It should be noted that this interpretation applies to government pension plans broadly and is not limited to cost-sharing plans.

Status of Additional Pension-Related Guidance Expected from the SLGEP

The SLGEP continues to put the finishing touches on a whitepaper and auditing interpretations related to agent multiple-employer plans (agent plans) and participating employers which will address the major challenges faced by each employer in supporting their individual pension amounts including net pension liability, deferred outflows of resources, deferred inflows of resources, and pension expense. It will also provide best practice solutions for both agent plans and employers to overcome these challenges. The SLGEP is continuing discussions with representatives of the AICPA Auditing Standards Board on agent plan topics and its goal is to issue the agent whitepaper in May and related auditing interpretations in June. Future GAQC Alerts will be issued upon the completion of these agent plan activities.

In addition, a new governmental pension chapter for the Audit and Accounting Guide, State and Local Governments, is under development. The chapter will cover various plan and employer auditor considerations, including ramifications when an employer auditor is not able to obtain sufficient appropriate evidence in order to opine on the pension amounts included in employer financial statements. The timing of the issuance of this chapter is still uncertain but the GAQC will issue an announcement when it is available.

Finally, the GAQC will be hosting a two-part pension Web-event series intended to provide key information to financial statement preparers (both plans and employers), as well as their auditors, on the issues related to cost-sharing and agent plans. See the sidebar on the left-hand column of this GAQC Alert for more information on these events and how to register. See also a recent e-mail from the GAQC that provided members with information on how to invite clients to these events.

AICPA Volunteer Committee Applications Due May 15th
If you are a partner in a firm or leader in a State Audit Organization and are interested in contributing to the profession and networking with your peers, then consider applying to serve on the GAQC Executive Committee, the State and Local Governments Expert Panel or various other AICPA Industry Expert Panels for which you may have relevant experience (e.g., the Not-for-Profit Entities Expert Panel, or the Health Care Entities Expert Panel). Applications are now being accepted for the next volunteer year (October 2014 - October 2015) and can be submitted until May 15, 2014. Access volunteer applications. Please be sure to provide a detailed resume along with your application that includes pertinent information about your industry experience (Click the "Resume & Letters of Recommendation" link to upload your current resume). If you have any questions regarding the application process or volunteering in general, send an email to AICPA Volunteer Services or call Jamie Geary (919-402-4103); Catey Bullard (919-402-4997); or Heather Collins (919-402-4846).
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AICPA Governmental Audit Quality Center
Stay Informed

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