AICPA Testimony Encourages the DOL’s Employee Benefit Security Administration to Educate Plan Administrators on the Financial Statement Audit Process

June 25, 2019

  • AICPA comments focus on how plan administrators can use the plan’s financial statement audit to help fulfill fiduciary responsibilities and improve plan operations.

Washington, D.C. (June 25, 2019) – The American Institute of CPAs (AICPA) testified today at the public hearing by the Department of Labor’s ERISA Advisory Council, “Beyond Plan Audit Compliance: Improving the Financial Statement Audit Process.” The AICPA responded to the Council’s request for “recommendations on actions the Secretary of Labor may take to increase the knowledge and understanding of plan administrators who procure financial statement audit services and to improve the procedures that such plan administrators implement in selecting an auditor.”

James Haubrock, CPA, chair of the Executive Committee of the AICPA Employee Benefit Plan Audit Quality Center (EBPAQC), outlined how the audit process can help plan administrators fulfill their fiduciary responsibilities by providing an opportunity and discipline to demonstrate due diligence by reviewing and enhancing plan governance, operations, records, internal control, compliance and reporting.

Haubrock added that by actively participating in the audit process, plan administrators are better able to make proper assertions relevant to the amounts, transactions and disclosures reported in the plan’s financial statements. “The plan administrator can maximize the value of the audit process by hiring a quality auditor, actively participate in the audit process, and use the audit process to help fulfill the plan administrator’s fiduciary responsibilities and improve the effectiveness and efficiency of plan operations,” according to Haubrock.

The EBPAQC is a voluntary membership center of more than 2,500 CPA firms that perform ERISA plan financial statement audits.

“Plan administrators must meet certain fiduciary responsibilities regarding plan financial reporting and operations. The AICPA welcomes the opportunity to share the CPA profession’s expertise in helping plan administrators take full advantage of the financial audit process,” said Ian MacKay, CPA, CGMA, director of Federal Regulatory Affairs – Public Accounting. “The EBPAQC has issued eight plan advisories to facilitate plan sponsors’, administrators’ and trustees’ understanding of their fiduciary and other responsibilities with respect to the plan audit and plan operations.”

The EBPAQC plan advisories are:

  • Employee Benefits Plans – Financial Statement Audits;
  • The Importance of Hiring a Quality Auditor to Perform Your Employee Benefit Plan Audit;
  • Understanding Auditor Communications;
  • Limited Scope Audits of Employee Benefit Plans;
  • The Importance of Internal Controls in Financial Reporting and Safeguarding Plan Assets;
  • Effective Monitoring of Outsourced Plan Recordkeeping and Reporting Functions;
  • The Importance of Retaining and Protecting Employee Benefit Plan Records; and
  • Valuing and Reporting Plan Investments.