Insights from SRP | Strategic Retirement Partners:
Change is Coming if Your Plan Uses a Limited Scope Audit
The American Institute of Certified Public Accountants, Inc. (AICPA) issued a new statement in July changing the requirements for its members that perform retirement plan audits. Previously, if a large plan utilized the limited scope audit option, the auditor effectively could wash their hands of any information that fell outside of that limited scope.
This new statement eliminates the use of the term “limited scope” and will require that AICPA members who complete plan audits will need to state that information on the financial statements not covered by the certification is fairly presented; and that the investment information contained in the financial statements reconciles with or is derived from information in the bank’s certification.
You might be wondering how these accounting rules modify ERISA*. Well, technically, they don’t. But if your auditor is a member of the AICPA, then they must follow these new professional requirements. In addition, these new requirements do seem to reinforce prior guidance from the Department of Labor advising that plan administrators have a fiduciary duty, when opting for a limited scope audit, to ensure that the certification process is a sufficient substitute for an audit of the financial information.
These requirements don’t go into effect until after December 15 of 2020, some plans and auditors will choose to implement them for their next plan audits.
For more information about the new requirements, check out this comprehensive article by The Wagner Law Group.
* The Employee Retirement Income Security Act of 1974
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