Employee Benefit Plan Advisories
February 1, 2017
Geffen Mesher is one of the first Portland-based members of the American Institute of CPA’s (AICPA’s) Employee Benefit Plan Audit Quality Center (EBPAQC). Our professionals regularly attend the AICPA Employee Benefit Plan conferences, to ensure we stay current with applicable regulatory laws and regulations. Through our participation with the EBPAQC and attendance at the AICPA EBP conferences, and our practical experience, we have the skills, relationships and resources to meet the requirements for an extensive variety of employee benefit plan audits.
To ensure our plan clients are knowledgeable about their responsibilities related to financial reporting and educated about plan audits and auditor communications, below are relevant EBPAQC Advisories. These Advisories outline plan clients’ fiduciary responsibilities for important aspects of financial reporting which often are misunderstood or of which the client may be unaware, such as valuing and reporting plan investments, monitoring service providers, and establishing and maintaining effective internal control over financial reporting.
Relevant EBPAQC Advisories:
Limited Scope Audits of Employee Benefit Plans provides plan sponsors, plan administrators, and trustees with an understanding of limited scope audits of their employee benefit plans. It describes the statutory and regulatory basis for the limited scope audit exemption, which institutions are qualified to issue a limited scope certification, what constitutes a proper certification from a qualified institution, the plan administrator’s responsibilities for determining the acceptability of a limited scope certification, the auditor’s responsibilities for determining whether a certification can be relied upon to limit the scope of the audit, the limited scope audit in the current environment, the effect of the limited scope audit exemption on the scope of the independent auditor’s testing and reporting, and common deficiencies in limited scope certifications. It also includes an example limited scope certification.
The Importance of Hiring a Quality Auditor to Perform Your Employee Benefit Plan Audit provides information about the care and prudence plan administrators should use in hiring a plan auditor. It describes why a financial statement audit is important; risks to plan sponsors if a quality audit is not performed; evaluating auditor qualifications; the proposal process, including the request for proposal, proposal evaluation and auditor selection; and documenting the agreement.
Employee Benefit Plans—Financial Statement Audits provides information to help plan clients understand the independent audit of the financial statements of an employee benefit plan. It describes the roles and responsibilities of individuals involved in the plan’s financial reporting and audit process, and the purpose, objectives and benefits of a financial statement audit, and discusses audit scope, general audit matters common to all audits, the audit process, the auditor’s report, and what the client can do to assist in the audit process.
Understanding Auditor Communications provides information about the various communications made by plan auditors to plan sponsors and others at the plan throughout the year. It provides an overview of auditor communications and discusses auditor’s communication with those charged with governance; engagement letters; management representation letters; communications about internal control matters identified in an audit; management letters and verbal communications; how auditor communications can help the client; and where to obtain additional information about auditor communications.
Effective Monitoring of Outsourced Plan Recordkeeping and Reporting Functions discusses the plan administrator’s responsibilities for monitoring service organizations hired to perform plan administration services to ensure they are performing the agreed-upon services. It discusses selecting and monitoring service organizations; the quality of plan accounting information; monitoring service organization controls over plan accounting information; and special considerations for different plan types (defined benefit, defined contribution, and health and welfare plans). It also includes suggestions for conducting on-site reviews of service organizations and provides examples of controls that help ensure complete and accurate plan accounting information and reporting.
The Importance of Internal Controls in Financial Reporting and Safeguarding Plan Assets discusses the plan administrator’s responsibilities for establishing and maintaining effective controls to reduce the risk of asset loss and help ensure that plan information is complete and accurate, financial statements are reliable, and laws and regulations are complied with. It discusses why internal control is important to the plan; the basics of internal control; how to establish cost-effective controls; monitoring controls; plan auditor communications of internal control deficiencies; how the plan auditor can help the client improve the effectiveness of the plan’s internal control; where to obtain additional information about internal controls; and contains helpful examples of controls for clients to consider establishing for their plans.
Valuing and Reporting Plan Investments discusses the plan administrator’s responsibilities for ensuring proper valuation and reporting of plan investments in the financial statements. It discusses the client’s responsibility for reporting plan investments; how plan investments are reported; investment valuation and related disclosures; the client’s responsibility for valuing investments and establishing internal controls; special considerations for alternative investments; investment information the client should request from the plan trustee or custodian and investment manager; how the independent auditor can assist the client; and where to obtain additional information. It also includes examples of suggested controls that plan management may wish to consider related to the financial reporting of investments.