The Employee Benefits Security Administration (EBSA) recently issued a report on the quality of benefit plan audits. The EBSA report identified a number of audit deficiencies and made recommendations for improving audit quality.
EBSA Observations –
- Audit quality is improved if the accounting firm:
- Performs a significant number of qualified plan audits
- Provides specific training on qualified plan audits to its staff
- Is a member of the American Institute of Certified Public Accounts’ (AICPA) Employee Benefit Plan Audit Quality Center
- Deficiencies are largely in the areas of timeliness of deposits, accuracy of demographic data and hardship withdrawal governance.
- Limited scope audits are often less rigorous than full scope audits.
EBSA Recommendations –
- Increase EBSA outreach to improve both education and the AICPA peer review process.
- Target audits performed by firms with smaller audit practices for review and enforcement.
- Amend ERISA to permit sanction of the auditor for an inadequate audit.
- Amend the definition of “qualified public accountant” to include additional requirements.
- Amend ERISA to either eliminate the limited scope audit exemption or allow the Secretary of Labor to define under what conditions a limited scope audit would be an acceptable substitute for a full audit