Auditing Standards No 136, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to the Employee Retirement Income Security Act of 1974 (ERISA), will be effective for audits ending after December 15, 2021.
In a previous article, we discussed the upcoming changes to employee benefit plan financial statements in detail. SAS 136 includes new requirements in all phases of an audit of ERISA plan financial statements, including engagement acceptance, risk assessment and response, communication with those charged with governance, performance procedures, and reporting.
A significant change coming from the guidance will be the presentation and ordering of the audit report. The report will provide a better understanding of the scope of the audit and clearly identifies the responsibilities of the plan sponsor and the auditor.
Plan sponsors can still elect to have a “Limited Scope Audit” performed but they will now be referred to as “ERISA Section 103(a)(3)(C) Audits”. Under current auditing standards, the audit report issued under a limited scope audit disclaimed an audit opinion, but under SAS 136 this will no longer be a scope limitation.
SAS 136 requires auditors to communicate reportable findings to those charged with governance. These findings must be communicated in writing. In addition, management must acknowledge in the engagement and representation letters their responsibilities as detailed in SAS 136.
DOL Late Remittance Letters
The Department of Labor (DOL) may issue a notice to Plan Administrators who may have engaged in a prohibited transaction by failing to remit participant contributions within the timeframes prescribed by ERISA. Per DOL guidelines, participant contributions should be remitted on the earliest date they can reasonably be segregated from the employer’s general assets. If you receive a notice, you may still have the opportunity to self-correct the prohibited transaction including restoration of any lost earnings and then apply through the DOL’s Voluntary Fiduciary Correction program. If your application is complete and meets the required conditions, a No Action letter will be issued by the DOL.