November 9, 2021
By Jennifer McCahill, CPA, Partner
In addition to disrupting business planning and operations, the COVID-19 pandemic also provided a reprieve from certain accounting standards changes with implementation dates in 2020. With the pandemic winding down and 2022 around the corner, now is the time to prepare for the implementation of SAS 136 for retirement plans ending December 31, 2021. While a majority of these changes will impact the annual audit, there are several items that the AICPA provides as “key changes that plan management should know”.
These changes will require more advanced planning for the audit than in years past, so organizations should factor this into their audit timeline for 2022.
- An engagement acceptance process that will require more information from management;
- The auditor will perform amended risk assessment procedures related to the plan instrument, tax status, and prohibited transaction;
- Written communications of additional matters (reportable findings) to those charged with plan governance are required;
- The auditor will perform certain additional audit procedures unique to ERISA plans; and
- The auditor will issue a new form of the “Independent Auditor’s Report”.
Plan Management Impacts
- Before the auditor can accept the audit, management will have to attest (in writing) its understanding of responsibilities for the following:
- Maintaining a current plan instrument (plan document, adoption agreement, etc.) including all amendments
- Administering the plan including ensuring transactions comply with plan provisions and maintaining records to support those transaction; and
- When Management elects an ERISA 103(a)(3)(c)
- Management determines that an ERISA Section 103(a)(3)(c) is permissible,
- Management determines that the investment information is prepared and certified by a qualified institution as described in the guidance,
- Management determines that the certification meets the requirements under the guidance, and
- Management determines that the certified investment information is appropriately measured, presented, and disclosed in accordance with the financial reporting framework.
- Management provides information on how the ERISA 103(a)(3)(c) evaluation was made; and
- Management provides a substantially complete draft of the 5500 to the auditor before the dating of the audit report.
For more information about the new audit standard, review the AICPA’s Employee Benefit Plan Audit Quality Center’s Plan Advisory. GRF’s Employee Benefit Plan Audit Team provides resources and industry expertise to help clients prepare for their next audit and assist their management in navigating the new requirements. Contact us to request specialized checklist tools that provide the necessary steps to comply with the new standard requirements.
Jennifer McCahill, CPA