3 EBP audit considerations in 2021
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3 EBP audit considerations in 2021

7 months ago · 2 min read · AICPA Insights Blog

I’m sure many of us relate to the “one-year-later” pandemic fatigue prominently featured in the news. I’ve heard from several members about difficulties connecting with and supervising remote audit teams while dealing with life during a pandemic.

Because I once was an employee benefit plan auditor, I understand your pain. EBP auditors must know and adhere to U.S. auditing standards, plus follow additional U.S. Department of Labor requirements. There are many changes for the EBP auditor to master this year.

Here are three considerations to keep in mind for audits this summer.

  1. The new auditor reporting model for ERISA plans
    Practitioners should pay attention to new standards becoming effective later this year, particularly SAS No. 136. While it may be tempting to work through the Oct. 15, 2021, deadline and then focus on implementing the new standards, that can lead to a compressed schedule at the end of the year, causing more stress.

    Consider how your firm can get ready to implement SASs No. 134–140 now since, together, they’re vitally important to audit quality and can affect the entire audit. As noted in the Journal of Accountancy, “When preparing to implement, it is important to recognize that this is not just adopting a new reporting model; various amendments to other AU-C sections may have performance implications for early in the audit.”

    Our At a Glance state that EBP auditors must know not only SAS No. 136, but also the entire suite because each standard within the suite is intertwined. For example, the Journal of Accountancy article says, “… SAS No. 138 amends SASs No. 134 and 136 with regard to the wording in the auditor’s report about when misstatements are considered material. Therefore, the wording of the auditor’s report would not be correct unless you considered the changes to the report arising from SAS No. 138.”

    In our continuing efforts to help you prepare for these significant changes, the AICPA® & CIMA® EBP Conference, May 3–5, features a dedicated SAS 136 session.

  2. Using SOC 1® in your audits
    More and more, auditors use System and Organization Control (SOC) 1 reports in financial statement audits. In 2017, the AICPA Peer Review Program analyzed more than 100 EBP audits and learned that it was challenging for EBP auditors to obtain an understanding of the controls at a service organization.

    Newer information from the AICPA Peer Review Program shows auditors still under- or over-rely on SOC 1 reports when completing EBP audit engagements. As you enter EBP audit busy season, continue to be vigilant about how your audit team uses SOC 1 reports. Identify the limitations of relying on one, as well as the responsibilities you and your clients have when using these reports.

  3. Fatigue and stress while performing audits
    Pandemic fatigue is real, and it can easily sneak up on you. Studies show that stress and fatigue can lead to more errors, which means more time spent reviewing staff work.

    Each year, partners and senior managers are expected to ensure U.S. audit standards are followed. With all of the staff working remotely, firm leaders must go above and beyond what is expected. Here are tips from partners on how to combat potential inefficiencies the ongoing pandemic can cause.

    1. Spend extra time training and onboarding new staff so they can be successful in a remote environment.

    2. Check in on remote staff, sending a positive message that you care.

    3. Offer virtual office hours when you are available to the audit team staff to answer questions and review notes in real time.

Finally, read in this CPA Insider article how Paula Davis, J.D., founder of the Stress & Resilience Institute, says we can all manage stress and burnout. No matter how you and your firm’s leadership address fatigue, remember the response should be holistic and not a one-size-fits-all approach.

From a past EBP auditor, I wish everyone a great EBP audit season!

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