This fall the Department of Labor's Employee Benefit Security Administration (EBSA) will launch a statistical study to assess the quality of audit work performed by independent auditors of ERISA benefit plan financial statements. EBSA's Office of the Chief Accountant (OCA) will select and review a statistical sample of 400 ERISA audits for compliance with professional standards and ERISA reporting and disclosure requirements. The sample will be stratified based on the number of ERISA audits performed by audit firms for the 2011 plan filing year.
According to the DOL EFAST database, approximately 7,300 CPA firms performed over 83,000 ERISA audits in the 2011 plan filing year. This includes approximately 3,700 CPA firms that performed only one or two ERISA audits and approximately 1,500 more CPA firms that only performed between three and five ERISA audits. Accordingly, it is expected that almost half the audits selected for review will have been performed by firms with very few ERISA audits.
Previous to this audit quality study, the most recently published DOL audit quality study was for the 1992 plan filing year (Assessment of the Quality of Employee Benefit Plan Audits, issued in March 1997).
Beginning in September the OCA expects to send letters to sponsors of those plans selected for the study, requesting the sponsor have the plan auditor send copies of the audit workpapers to the OCA's offices for review. The OCA does not anticipate the need to visit the plan sponsor's or auditors' offices to conduct its review. The OCA will ask plan sponsors to respond to the inquiry letter within 15 days and encourages plan sponsors and auditors to contact them with any questions.
If your plan audit is selected for review, please know that the review is not part of a DOL investigation or enforcement effort. Contact us if you should receive notice of selection so that we can assist you with responding in a timely manner.
By Bob Cann, CPA, Partner, firstname.lastname@example.org