Federal Issues

    ERISA Fiduciary Definition - Appraisers of Employee Stock Ownership Plans 

    UPDATE -- The Department of Labor indicated in a recently issued FAQ  that ESOP appraisers would be covered in a new conflict of interest rule to be issued sometime in 2015.  The AICPA believes the removal of valuation providers from the proposed rule is a positive outcome.  Importantly, the DOL has expressed interest in working with the appraiser community to improve guidance for ESOP appraisers, and the AICPA looks forward to working with the Department to craft a solution that protects plan participants while not imposing an undue burden on plans or valuation providers.   Click for more information.

    The AICPA believes that CPAs who perform valuation services for employee stock ownership plans (ESOPs) should not be defined as fiduciaries under the Employee Retirement Income Security Act (ERISA). Rather, the AICPA believes that the U.S. Department of Labor (DOL) should implement rules that would require appraisers of ESOPs to meet minimum qualification requirements, including holding relevant credentials and training, and comply with applicable professional valuation standards.

    Background and Proposed Regulatory Action

    The DOL has expressed concerns with the quality of a limited number of appraisals of ESOPs subject to ERISA, and that it lacks the authority to take legal action against ESOP appraisers. To address its concerns, in November 2010 the DOL proposed rules that would broaden the agency’s definition of a ERISA fiduciary to include persons who provide advice, or an appraisal or fairness opinion concerning the value of securities or other property.

    In September 2011, the DOL withdrew its proposal and announced that it would re-propose its fiduciary rule. According to the DOL’s website, a new rule proposal is expected to be issued August 2014.

    The Issue in brief:

    AICPA’s Senior Vice President for Governmental & Public Affairs, Mark Peterson, discusses the DOL’s anticipated fiduciary rule re-proposal and its impact on CPAs.

    AICPA Position on Regulatory Action

    AICPA believes the DOL should not expand the longstanding definition of fiduciary under ERISA.  Specifically, the AICPA expressed significant concerns with the DOL’s original 2010 proposal, including that the proposal:

    • Would create a conflict between a fiduciary’s strict duty of loyalty to plan participants and beneficiaries and professional appraisal standards, which require an appraiser to perform assignments with impartiality, objectivity and independence,  
    • Does not address the underlying issue of proper qualifications and standards for performing valuation services,
    • Will increase the cost of valuation services for ESOP plans, and 
    • Will restrict the number of valuation specialists willing to do valuations for ESOP plans.

    The AICPA recommended the DOL instead implement rules to ensure that only qualified individuals prepare ESOP valuations and that appraisers have proper qualifications and follow recognized valuation standards. The DOL’s rule should mirror other regulatory agencies regarding the regulation of appraisers.

    Legislative Action

    Senator Kelly Ayotte (R-NH), with a bi-partisan group of several senators, introduced legislation in the last Congress (S. 1232) and again in February 2013 (S. 273) to modify the definition of fiduciaries under ERISA to specifically exclude ESOP appraisers. Representative Brett Guthrie (R-KY), also with bi-partisan support, introduced corresponding legislation (H.R. 2041) in May 2013.

    AICPA Position on Legislation

    The AICPA supports S. 273 and H.R. 2041.


    Contacting Your Member of Congress

    1. If this issue affects you or your clients, or if you have relationships with your Members of Congress, please consider taking the following steps to ask your Representative and Senators to co-sponsor these bills.
    2. To write your Congressman, go to the United States House of Representatives website and enter your zip code to find your Representative.
    3. To write your Senators, go to the United State Senate website and find your Senators' websites.
    4. Use your Members of Congress’ online contact forms on their websites to send your letters. State your purpose for writing in the first sentence, and be sure to ask for support of the appropriate measure (S. 273 for Senators; H.R. 2041 for House members).
    5. Cut and paste the appropriate sample letter below into the body of the email. Please let us know who you contacted and send a copy of your letters to congaffairs@aicpa.org.

    Sample letter for your Representative in the House
    Sample letter for your Senators

    If you choose to call instead of write, below are talking points to help:

    Talking points for your Representative in the House
    Talking points for your Senators

    Copy of Legislation

    All major Congressional actions related to this are available on the Library of Congress's

    THOMAS website by searching for S. 273 and H.R. 2041 by bill number.

    AICPA Comment Letters and Testimony to Department of Labor

    April 12, 2011 AICPA FVS Executive Committee - Second Comment Letter to DOL on its Proposed Fiduciary Definition Rule

    March 2, 2011 AICPA FVS Executive Committee Member Robert Reilly's Testimony at the DOL Employee Benefits Security Administration Hearing

    January 25, 2011 AICPA FVS Executive Committee - First Comment Letter to DOL on its Proposed Fiduciary Definition Rule 

    AICPA Letters to Members of Congress
    July 10, 2013 AICPA Letter in Support of S.273 and H.R. 2041 (113th Congress bills)

    August 8, 2012 AICPA Letter to Senators Harkin and Enzi in Support of S.1232 (112th Congress bill) 

    Related Articles

    "AICPA Opposes Potential Change in DOL Fiduciary Rule for Appraisers of Employee Stock Ownership Plans." The CPA Advocate: July 18, 2013

    "AICPA Opposes Expansion of Fiduciary Definition to Include ESOP Appraisers." AccountingToday: July 16, 2013

    Staff Contacts

    Diana Huntress Deem
    Director, Congressional and Political Affairs

    Eddy Parker
    Senior Technical Manager, Forensic and Valuation Services

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