The American Institute of CPAs’ Employee Benefit Plan Audit Quality Center has released an advisory document on the importance of hiring a quality auditor to perform employee benefit plan financial statement audits, along information to help select a quality auditor.
The advisory is aimed at employee benefit plan sponsors, administrators and trustees. Generally, the AICPA noted, the Employee Retirement Income Security Act of 1974 requires employee benefit plans with 100 or more participants to have an audit as part of their obligation to file an annual report. If an employee benefit plan is required to have an audit, one of the sponsor’s most important duties is to hire an independent qualified public accountant, and to ensure that the plan has obtained a quality audit in accordance with ERISA and Labor Department requirements.
ERISA holds plan administrators responsible for ensuring that financial statements in the plan are properly audited in accordance with generally accepted auditing standards. The hiring of a plan auditor is considered to be a fiduciary function. Plan administrators should therefore use the same care and prudence in hiring a plan auditor that they use when hiring any individual or entity that provides services to the plan.
The plan advisory describes why a financial statement audit is important; the risks to plan sponsors if a quality audit is not performed; how to evaluate the auditor’s qualifications; the proposal process, including the request for proposals, proposal evaluation and auditor selection; and documenting the agreement.
“Because of the uniqueness and complexity of employee benefit plan audits, plan administrators should make the choice of a qualified auditor a high priority and be sure the selection process considers the auditor’s experience, training and commitment to quality,” said AICPA director of federal regulatory affairs Ian MacKay in a statement.
The AICPA’s EBPAQC is a firm-based, volunteer membership center created with the goal of promoting quality employee benefit plan audits. Members of the center demonstrate their commitment to ERISA audit quality by joining and agreeing to adhere to the center’s membership requirements. EBPAQC member firms receive best-practice tools on ERISA audits and other resources.
For more information, visit aicpa.org/EBPAQC.
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