Employee Benefit Plans - Financial Statement Reporting

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Michelle L. Steinbronn, CPA

In July 2019 Statement on Auditing Standards (“SAS”) No. 136 was issued by the Auditing Standards Board and addressed the auditor’s responsibility to form an opinion on the financial statements of employee benefit plans (“EBPs”) subject to the Employee Retirement Income Security Act of 1974 (“ERISA”). This SAS is effective for audits of ERISA EBP financial statements for periods ending on or after December 15, 2020. Early implementation is not permitted.

Upon implantation of this SAS, management may continue to elect to engage the auditor to perform an EBP audit utilizing certified investment information (as defined by the Code of Regulations Title 29, Section 2520.103-5 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under ERISA) which will then be referred to as an “ERISA Section 103(a)(3)(C)” audit (instead of a “limited scope” audit). This change will affect the audit report such that the auditor will be able to issue an unqualified opinion on the financial statements rather than a disclaimer of opinion (assuming other conditions are not present requiring a modified opinion).

The SAS contains various auditor requirements and management procedures to ensure there is an adequate audit. For more details and the full text of the SAS, please visit the AICPA’s website.

As always, please contact the experts at Fortner, Bayens, Levkulich & Garrison P.C. for answers to your employee benefit plan questions.