In July 2019, the Auditing Standards Board of the American Institute of Certified Public Accountants (AICPA) issued a revised Statement on Auditing Standards No. 136 entitled, “Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA.” Originally slated to take effect for tax periods ending after December 15, 2020, the revised standard was delayed by one year. Audit firms may however choose to adopt the standard on the original effective date.
This newly revised audit standard is important since tax-qualified retirement plans, among others, are required to submit an audit issued by an Independent Qualified Public Accountant (IQPA) with the plan’s annual report, Form 5500. (Small plans, i.e., those with fewer than 100 participants at the beginning of the plan year may qualify for an exemption provided certain requirements related to the composition of the plan’s assets are satisfied.) The purpose of the audit is to certify that plan’s financial statements and schedules are presented fairly and in conformity with Generally Accepted Accounting Principles (GAAP).
Plan sponsors, fiduciaries, and fiduciary committees are all affected by the revised rules in at least the following three ways:
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