While speaking at the 2021 AICPA Employee Benefit Plans (EBP) Conference, Michael Auerbach, Chief Accountant of the DOL's Employee Benefit Security Administration, stated that, while the DOL has not issued clarifying guidance on how to report the type of accountant's opinion on Schedule H Part III - Accountant's Opinion of the 2020 Form 5500, SAS No. 136, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA, is not early adopted for 2020 plan year audits, the DOL staff's preferred treatment is for preparers to check line 3a as "Unmodified" (box (1)) and to check the box on line 3b based upon the scope of the plan’s audit.
However, the DOL staff recognizes that some firms are not comfortable checking "unmodified," if they have issued a limited scope disclaimer opinion. In such cases, the preparer may check "Disclaimer" (box (3)) on line 3a. Mr. Auerbach noted that while this treatment is not preferred, it will not, in and of itself, create an enforcement issue.
The AICPA Auditing Standards Board deferred the effective date of SAS No. 136, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA, as amended, until periods ending on or after December 15, 2021, although earlier implementation is permitted. As of the date of the deferral, the instructions for the 2020 version of the Form 5500, Annual Return/Report of Employee Benefit Plan had already been revised to reflect the requirements of SAS No. 136. However, most firms are not early adopting SAS No. 136, which is creating confusion among Form 5500 preparers about how certain information related to the accountant's opinion and type of audit performed should be reported in Part III—Accountant's Opinion, Lines 3a and 3b, on Schedule H, Financial Information.
If the auditor adopts SAS No. 136 for the 2020 filing period, plan administrators, including plan management and third-party service organizations, should refer to the 2020 Form 5500, Schedule H instructions for lines 3a and 3b. [Note: SAS No. 136 no longer allows for a disclaimer of opinion solely if management elects to have an audit performed in accordance with ERISA Section 103(a)(3)(C) pursuant to 29 CFR 2520.103-8 of the Department of Labor's Rules and Regulations for Reporting and Disclosure under ERISA.]
As the changes made to lines 3a and 3b of Part III of Schedule H, and to the instructions for lines 3a and 3b, did not anticipate the deferral of SAS No. 136, they do not reflect the fact that auditors who did not early adopt SAS No. 136 will be issuing accountant's opinions using the current (pre-SAS No. 136) auditor reporting standards for the 2020 filing period. The Form 5500 Series is used to make these changes.
For additional questions, contact the DOL's EBSA Office of Chief Accountant at (202) 693-8360 (voice mail is being regularly monitored).