EBPAQC Alert No. 107 

    Published August 17, 2007


    Additional Live Forum on Stable Value Investments FSP; Online Forum
    Contest; Center Press Release on SAS 112; SEC Updates FAQs on Auditor
    Independence

    Dear Center Members

    Enter the Forum

    Mark Your Calendar and Register

    Additional Live Forum on Implementing the Stable
    Value Investments FSP - Questions & Answers

    Friday, September 7, 2007
    12:00 pm – 1:30 pm Eastern

    The Center has scheduled an additional Live Forum on the Stable Value Investments FSP to help you with initial year implementation of the audit and reporting requirements associated with FASB Staff Position (FSP) AAG INV-1 and SOP 94-4-1. Hear what implementation issues and questions remain with the new reporting and disclosure requirements for stable value investments. Participate on this call to learn what other firms have experienced and how they are addressing the issues to meet the upcoming October 15 Form 5500 filing deadline.

    On September 7, 2007, from 12:00 pm – 1:30 pm Eastern Time, Michele Weldon, partner with PriceWaterhouse Coopers LLP, will moderate a conference call with other representatives of the Employee Benefit Plans Expert Panel and the EBPAQC Executive Committee to discuss remaining questions and issues with implementing the FSP.

    Topics for the Q & A session will include:

    • Identifying and addressing implementation issues prior to Form 5500 filing deadlines
    • Suggestions on obtaining the required information to be included in the plan's financial statements from investment companies and insurance companies
    • Fair value vs. contract value calculations
    • "Evergreen" group annuity contracts
    • Wrapper contract valuations
    • CCT and master trust considerations
    • Audit considerations, including timing, materiality and limited scope certification issues

    This session will not provide an overview of the FSP requirements. The Center previously sponsored a Live Forum on Stable Value Investments on November 7, 2006, which provided an overview of the new FSP, and a Live Forum Question & Answer Session on the FSP on June 20, 2007. To listen to the audio recordings of these events visit the Center website under "Past Events."

    Center EAlert #77 included the November 2006 Live Forum presentation materials and a primer on stable value investments. Center EAlert #96 communicated the issuance of three Technical Practice Aids (TPAs) which provided additional guidance on implementing the FSP. Also, Center EAlert #106 provided illustrative financial statements for stable value FSP implementation. Past EAlerts are archived on the Center website under "Resources."

    To better prepare the panelists in addressing your issues, we encourage you to submit your questions, issues and experiences with implementing the FSP in advance by emailing the Center at ebpaqc@aicpa.org. You will also have the opportunity to email your questions during the call.  

    We hope you will be able to join us for this Live Forum. Due to teleconferencing restrictions, we ask that each member firm limit its participation to one dial-in line per office. In the event that your schedule does not permit you to participate in the live call, the call will also be recorded and archived and may be listened to by members free of charge after September 14. Additional information about the archived Live Forum will be available on the Center website under the Events tab in "Past Events".

    Please pre-register to participate. To help us determine the number of phone lines to open, please pre-register for your participation in the call by providing us with your name, firm name, email address, and the city in which your firm's office is located by emailing the Center at ebpaqc@aicpa.org by Wednesday, September 5, 2007.

    Additional participant information and dial-in instructions will be sent a few days before the event to all individuals who have pre-registered and all designated partners. Each designated partner is responsible for forwarding this information to applicable participants within their firm who have not pre-registered. No CPE credit is offered for this event.

    We hope you will plan to "attend" this important event.

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    Reminder to Participate in EBPAQC Online Forum Contest

    If you've not already done so, don't forget to log on and use the Center Online Discussion Forum between now and August 31, 2007 to be automatically entered for a chance to win two exciting prizes:

    • Help a member by responding to a member posting on the Center Online Forum and you will be automatically entered for a chance to win a free registration for the December 13 – 14, 2007 AICPA Employee Benefit Plans Accounting, Auditing and Regulatory Update Conference in Washington, DC.
    • Post a new discussion topic on the Forum and you will be automatically entered to win a $200 gift certificate.

    Each winner will be randomly drawn and notified by September 7. Participants must be AICPA members employed by a Center firm. The conference registration is transferable – if you are not able to attend the conference you may transfer it to another employee in your firm.

    Since August 1, the Online Forum has already received more than 70 new topics and over 100 new postings. Please consider assisting a peer by answering a question or post your own question to be entered in the contest.

    Enter the Forum

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    Center Issues Press Release on SAS 112 Impact to Employee Benefit Plans

    In an effort to educate plan sponsors, administrators and trustees about the new requirements and impact of SAS 112, Communicating Internal Control Related Matters Identified in an Audit, on employee benefit plans, the Center issued a press release indicating that plans should expect increased transparency in the quality of their internal controls over financial reporting. The press release notes that the auditor's SAS 112 written communications will help sponsors, administrators and trustees fulfill their ERISA fiduciary responsibility to ensure that the plan has adequate controls in place to provide accurate and complete financial reporting. Plan administrators and trustees are encouraged to be proactive and contact their audit firm and inquire about the new communication requirement and whether the plan should expect to receive a SAS 112 letter, what control deficiencies the auditor has identified and any recommendations to improve the plan's internal controls. The press release was sent to numerous benefit plan associations and the media and is attached to this alert. Center member firms may wish to use or refer to the press release in communications with clients.

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    New SEC Auditor Independence FAQs Affect Employee Benefit Plans of Public Companies

    On August 6, 2007, the SEC's Office of Chief Accountant issued revisions to its Application of the Commission's Rules on Auditor Independence: Frequently Asked Questions. Three of the new questions and answers relate specifically to employee benefit plans of public companies and address audit committee pre-approval, prohibited non-audit services, and fee disclosures. These new SEC FAQs are included below: 

    Audit Committee Pre-approval
    Question 6 (issued August 06, 2007)
    Q: Does the audit committee of the plan sponsor of an employee benefit plan have to pre-approve the audit of the plan?

    A: No. The Commission's independence rules (2.01(c)(7)) require pre-approval of services provided to the issuer and the issuer's subsidiaries, but not pre-approval of services provided to other affiliates of the issuer that are not subsidiaries. Therefore, the independence rules do not require the audit committee of the plan sponsor to pre-approve audits of the employee benefit plans. Audit committees however, are not precluded from establishing policies to do so. 

    Prohibited and Non-audit Services
    Question 9 (issued August 06, 2007)
    Q: Is the independence of an auditor of an employee benefit plan, Form 11-K filer, impaired if he or she provides prohibited non-audit services to the non-audit client sponsor of the employee benefit plan?

    A: It depends on the type of prohibited non-audit services provided. The employee benefit plan, while a separate issuer, is considered to be an affiliate of the sponsor to the plan, and therefore subject to the Commission's rules regarding prohibited non-audit services. However, because the accountant is auditing the employee benefit plan (and not the plan sponsor) such services would be permissible as long as:  (i)  such services are limited to those prohibited non-audit services [at Rule 2-01(c) (4) (i.-v.)] which contain the modifier "…unless it is reasonable to conclude that the results of these services will not be subject to audit procedures during an audit of the audit client's financial statements;" and (ii)  the auditor does not provide any services that would affect the financial statements of the plan or the benefit plan audit.

    Fee Disclosures
    Question 10 (issued August 06, 2007)
    Q: Are the fees paid to the principal auditor of a sponsor for the audit of its employee benefit plan, regardless of whether paid by the sponsor or the plan, required to be disclosed in the sponsor's proxy statement?

    A: Yes. The Commission's rules (Items 9(e)(1)-(e)(4) of Schedule 14A) require all fees paid to the principal auditor be included in the issuer's fee disclosures. This includes fees related to the audits of any employee benefit plan for which the registrant is the sponsor, regardless of whether or not the issuer paid those fees or the audit committee of the issuer pre-approved those fees. The issuer may elect to identify in their disclosures those fees paid to the accountant that were not paid by the issuer or subject to the pre-approval requirements.

    The full August 6, 2007, revisions to the SEC's Application of the Commission's Rules on Auditor Independence: Frequently Asked Questions are available by clicking here.

    Sincerely,

    AICPA Employee Benefit Plan Audit Quality Center

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    Stay Informed

    As a member of the Center, your firm will receive periodic updates on important developments related to employee benefit plan auditing as well as the activities of the Center. To stay abreast of these and other relevant events, please visit the Center Web site at www.aicpa.org/EBPAQC. Also, we welcome any suggestions or questions—please send them by e-mail at EBPAQC@aicpa.org.

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