The Auditing Standards Board of the American Institute of CPAs (AICPA) has voted to issue a new auditing standard. It has taken this step to address auditor reporting on ERISA plan financial statements.
The new auditing standard, “Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA,” addresses the auditor’s responsibility to form an opinion and report on the audit of financial statements of employee benefit plans subject to ERISA, and the form and content of the auditor’s report issued as a result of an audit of ERISA plan financial statements. It is expected to be effective no earlier than for audits of financial statements for periods ending on or after Dec. 15, 2020.
The standard includes new requirements for:
- engagement acceptance;
- audit risk assessment and response;
- communications with those charged with governance;
- procedures for an ERISA Section 103(a)(3)(C) audit; and
- considerations relating to the Form 5500.
The standard also contains a new report format for ERISA Section 103(a)(3)(C) audits. And for audits of ERISA plan financial statements only, it would apply in place of AU-C section 700, “Forming an Opinion and Reporting on Financial Statements,” and paragraph .09 of AU-C section 725, “Supplementary Information in Relation to the Financial Statements as a Whole.” The new standard also would amend various other AU-C sections in AICPA’s Professional Standards.
AICPA’s Auditing Standards Board reportedly expects to consider whether conforming amendments to this statement will be necessary if the Proposed Statements on Auditing Standards Auditor Reporting and Related Amendments are approved and issued, which AICPA says it expects to occur in the first half of 2019.
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