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Employee Benefit Plan Audit Quality Center
1
EBPAQC Designated Partner
2015 Audit Planning
January 21, 2015
2
Administrative Notes
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Note the interactive toolbar at the bottom of your screen.
For technical support,
• please click the “Help”
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Employee Benefit Plan Audit Quality Center
for a list of troubleshooting FAQs
to email or call AICPA member service
3
Handouts for Today’s Event
You can download presentation slides (in PDF or PowerPoint
format) and other handouts by clicking on
in the toolbar
at the bottom of your screen
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Instructions on how obtain your CPE Certificate for today’s event
Webinar presentation PPT slides (both .ppt and .pdf formats)
EBPAQC Tools and Resources
AICPA EBP Resources (Publications, Conferences, Workshops)
EBP Audit Preparedness Checklist
Common EBP Audit Deficiencies
Hiring a Quality EBP Auditor Plan Advisory
Health and Welfare Plans Primer
Nonattest Services Independence Review Tool
Actuarial Report Review Documentation Tool
Employee Benefit Plan Audit Quality Center
4
How to Submit Questions
We encourage you to submit your technical
questions – please limit your questions to the
content of today’s program
Submit your questions in the box in the lower left
hand corner or by clicking on the
in the tool
bar at the bottom of your screen
Employee Benefit Plan Audit Quality Center
5
Obtaining CPE Credit
Must have pre-registered for the paid CPE Credit option
There will be random participation questions to verify your
attendance, please respond to these questions.
• To obtain CPE, you must respond to 75% of the participation
questions
• If you are not receiving CPE for this event, ignore these
participation questions
You can access your CPE certificate by clicking on
in the
interactive toolbar at the bottom of your screen at the end of
today’s presentation.
Contact the Service Center for help with obtaining CPE at
888.777.7077 or service@aicpa.org
Employee Benefit Plan Audit Quality Center
6
Presenters
Alice Wunderlich, CPA, Chair, EBPAQC Executive
Committee; Deloitte & Touche LLP
Anita Baker, CPA, CliftonLarsonAllen LLP
Jodi Malis, CPA, Hancock Askew & Co., LLP
Ian Dingwall, CPA, DOL EBSA Chief Accountant
Lisa Beard-Niemann, IRS, Director EP Examinations
Rance Buss, CPA, Weaver
Employee Benefit Plan Audit Quality Center
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Today’s Objectives
Prepare your firm for 2015 EBP audit season
Highlight new accounting and auditing
requirements effective this audit year and
issues on the near horizon
Provide overview of EBPAQC tools and
resources available
Learn about DOL and IRS regulatory initiatives
Provide an opportunity to “ask the experts”
Employee Benefit Plan Audit Quality Center
8
A Message From The
EBPAQC Chair
Alice Wunderlich, CPA
Chair, Executive Committee,
AICPA EBPAQC
Deloitte & Touche LLP
Employee Benefit Plan Audit Quality Center
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EBPAQC Chair’s Message
First year for mandatory participation in DP
webinar
AICPA activities re: DOL audit quality study
Liaison activities with FASB
Employee Benefit Plan Audit Quality Center
10
Key Accounting and Auditing
Considerations
Alice Wunderlich, CPA
Chair, Executive Committee,
AICPA EBPAQC
Deloitte & Touche LLP
Employee Benefit Plan Audit Quality Center
11
A Few Items From 2013
Employee Benefit Plan Audit Quality Center
12
ASU 2011-11 as amended by ASU 2013-01
Balance Sheet Offsetting –
implementation
Required additional disclosures for derivatives,
securities borrowing and lending, repurchase
agreements and reverse repos
How did plan sponsors approach?
• Material?
• Within scope?
• Were other disclosures enhanced?
Employee Benefit Plan Audit Quality Center
13
Pension Funding Requirements: HATFA
Extends MAP-21
Highway and Transportation Act (HATFA) signed into law
August 8, 2014
Included funding relief for pensions
Timing resulted in:
• Revised 2013 funding decisions before 5500 filing
• Amended Form 5500 and Schedule SB after 5500 filing
Reporting ramifications
• Timing of contribution recognition
• Reconciliation note in financial statements
• See Audit Guide Ch. 6 Contributions and Cont. Receivable
Employee Benefit Plan Audit Quality Center
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Considerations for 403(b) plans
Successor auditor considerations
New plans that allow participants to transfer from other
403(b) plans
Tracking pre 2009 balances
• Establish balances as of 1/1/2009
• Track distributions
Employee Benefit Plan Audit Quality Center
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Hot Topics for 2014
Employee Benefit Plan Audit Quality Center
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Non-attest Services and the New AICPA
Independence Rules
Revised Ethics Rules for Non-attest Services
• Financial statement preparation
• Cash-to-accrual conversions
• Other
Prior to revision considered part of the normal audit
process
Management responsibilities
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Assume responsibility
Oversee the service by a designated individual
Be able to evaluate the adequacy and results
Accept responsibility for the results of the services
Employee Benefit Plan Audit Quality Center
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Non-attest Services and the New AICPA
Independence Rules
Auditor responsibilities (document in writing)
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Objectives of the engagement
Services performed
Clients acceptance of its responsibilities and member’s responsibilities
Any limitations of the engagement
Permitted to assist plan clients with financial statement preparation,
but must make certain the requirements are met and other nonattest services do not have a cumulative effect
New Audit Quality Center Tool—Documentation of Review of AICPA
Independence Requirements Where Non-attest Services are
Performed for an Employee Benefit Plan Audit Client
Employee Benefit Plan Audit Quality Center
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Form 11-K Reminders
Do not file PCAOB auditor’s report with the Form 5500
Preparing the financial statements may violate auditor’s
independence
• Auditors should not provide typing and word processing services nor
financial statement templates that are not publicly available to audit
clients (See Dec 2014 EBPAQC e-alert)
Audit Quality Tool (“11-k SEC
Reporting Requirements”)
Employee Benefit Plan Audit Quality Center
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PCAOB AS 17 Auditing Supplemental
Information Accompanying Audited
Financial Statements
Effective for audit procedures and reports on supplemental
information that accompanies financial statements for fiscal
years ending on or after June 1, 2014
Provides audit procedures on supplemental information
Requires representations from management
Example auditor’s report
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The [identify supplemental information] has been subjected to audit procedures performed in
conjunction with the audit of [Company's] financial statements. The [supplemental information] is the
responsibility of the Company's management. Our audit procedures included determining whether
the [supplemental information] reconciles to the financial statements or the underlying accounting
and other records, as applicable, and performing procedures to test the completeness and accuracy
of the information presented in the [supplemental information]. In forming our opinion on the
[supplemental information], we evaluated whether the [supplemental information], including its form
and content, is presented in conformity with [specify the relevant regulatory requirement or other
criteria, if any]. In our opinion, the [identify supplemental information] is fairly stated, in all
material respects, in relation to the financial statements as a whole.
Employee Benefit Plan Audit Quality Center
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PCAOB AS 18 Related Parties
Effective for audits of financial statements for fiscal years beginning
on or after December 15, 2014
Requires the auditor to:
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Perform specific procedures to obtain an understanding of the company's relationships
and transactions with its related parties
Evaluate whether the company has properly identified its related parties and
relationships and transactions with its related parties
Perform specific procedures if the auditor determines that a related party or relationship
or transaction with a related party previously undisclosed to the auditor exists
Perform specific procedures regarding each related party transaction that is either
required to be disclosed in the financial statements or determined to be a significant
risk.
Communicate to the audit committee the auditor's evaluation of the company's (a)
identification of, (b) accounting for, and (c) disclosure of its relationships and
transactions with related parties, and other related significant matters arising from the
audit
Employee Benefit Plan Audit Quality Center
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ASU 2013-07 Liquidation Basis of Accounting
Effective for annual reporting periods beginning
after December 15, 2013
• Early adoption permitted
• Entities already using liquidation basis are not required to apply
the amendments
Provides guidance for preparation of financial
statements and disclosures under the liquidation
basis of accounting
Apply liquidation basis prospectively from the date
liquidation becomes imminent
Employee Benefit Plan Audit Quality Center
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Liquidation is imminent when…
A plan for liquidation has
been
approved
parties
Effective
forby
annual
with authority to do so
AND
It is remote that execution
of the plan will be blocked
by other parties
A plan for liquidation is
imposed by other forces
(e.g., involuntary
bankruptcy)
It is remote that the entity will return from liquidation
Liquidation is imminent
Employee Benefit Plan Audit Quality Center
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Technical Questions and Answers Sections
6931.18-30
Non-authoritative guidance about the effects of
FASB ASC 205-30 Liquidation Basis of Accounting
(Announced in EBPAQC e-alert #326, Oct. 31, 2014)
Accounting for primarily single-employer defined
benefit plans and defined contribution plans
although the information in certain replies may be
relevant for other types of plans
Includes illustrations of a single-employer DB plan
using the liquidation basis of accounting
Employee Benefit Plan Audit Quality Center
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Liquidation basis of accounting:
EBP frequently asked questions
What are some considerations when determining when liquidation is
imminent?
Is liquidation basis applicable for a plan merger?
Should the benefit information be presented as of beginning of year
or end of year?
How should the benefit information be presented?
Should a contribution receivable from the sponsor be recorded for an
underfunded plan?
Should a payable to the sponsor be recorded if the plan is
overfunded?
How are comparative financial statements presented in the year
liquidation is imminent?
How are fully-benefit responsive investment contracts presented?
Are fair value disclosures applicable?
Employee Benefit Plan Audit Quality Center
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Pension Assumptions – New Mortality Tables
The Society of Actuaries released new mortality
tables in October, 2014 called the RP-2014 tables
• Anticipated to be used for accounting purposes immediately (in
the next actuarial valuation)
• IRS yet to determine timing for funding purposes
Increased life expectancy, which will increase a
plan’s total expected benefit payments and lengthen
a plan’s time horizon
Obligation will significantly increase
www.soa.org
Employee Benefit Plan Audit Quality Center
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Statement on Auditing Standard 128, Using
the Work of Internal Auditors (AU-C 610)
Issued February 2014
Effective for Financial Statements ending on or after
December 15, 2014
SAS No. 128 addresses the external auditor’s
responsibilities if using the work of internal
auditors. Including (a) using the work of the internal
audit function in obtaining audit evidence and (b)
using internal auditors to provide direct assistance
under the direction, supervision, and review of the
external auditor.
Employee Benefit Plan Audit Quality Center
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Statement on Auditing Standard 128, Using
the Work of Internal Auditors (AU-C 610)
SAS 128 (AICPA AU-C 610.30) introduced the
following new requirement related to using internal
auditors to provide direct assistance:
“Prior to using internal auditors to provide direct
assistance, the external auditor should obtain
written acknowledgment from management or the
audit committee, as appropriate, that internal
auditors providing direct assistance to the external
auditor will be allowed to follow the external
auditor’s instructions, and that the entity will not
intervene in the work the internal auditor performs
for the external auditor.”
Employee Benefit Plan Audit Quality Center
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New Accounting and Reporting Standards
Relating to Investments for 2014 Audits
ASU 2013-08, Financial Services-Investment
Companies (Topic 946)
• Effective years beginning after December 15, 2013
• Entity is investment company that both (1) obtains funds from
investors and provides investment mgt. services and (2)
business purpose is invest funds for returns
• Additional typical characteristics
- >1 investment
- >1 investor
- Investors are not related parties
- Equity or partnership ownership interest
- Manages investments at fair value
Employee Benefit Plan Audit Quality Center
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New Accounting and Reporting Standards
Relating to Investments—ASU 2013-08
Judgment needed to consider all facts and
circumstances
Fund financial statements will require a sentence
that the entity meets the definition of an investment
company
Effect on EBPs
• ASU provides guidance to assist in determining if underlying
investment arrangements are “funds” and allow for “fund”
accounting, auditing and reporting
Employee Benefit Plan Audit Quality Center
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On the Horizon
Employee Benefit Plan Audit Quality Center
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AICPA EBP Expert Panel (EP)
Advocacy Efforts with the FASB
January 2013 - EP met with FASB representative
October 2013 - EP provided FASB with discussion
memorandum
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Observations include areas in current EBP accounting that are conflicting,
redundant, irrelevant or incomplete due to the specialized characteristics of
plans
Category A
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Investments and fair value disclosures
Nonpublic entity considerations
Holistic review of plan disclosures
Category B
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DB plan observations
Challenges for ESOPs
H&W plan observations
Employee Benefit Plan Audit Quality Center
EITF Agenda
November 5, 2014 FASB Board meeting
• Fair value hierarchy – differences between ASC 820 and plan
accounting with respect to extent of aggregation or
disaggregation required for (i) participant-directed investments
and (ii) disclosures about appreciation/depreciation
• Classes of assets – conflicting disclosure requirements
between ASC 820 and plan accounting for disaggregation of
assets
• Fully benefit-responsive investment contracts – measurement of
these contracts (fair value vs. contract value)
Other topics may be considered for a future project
Employee Benefit Plan Audit Quality Center
New ESOP Chapter for EBP Audit Guide
ESOP task force developing a new chapter for the EBP
Guide consisting of auditors, tax professionals, and the
DOL.
Accounting and reporting section has been sent to
FinREC for clearance.
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Issues Paper
ESOP account and reporting chapter
Appendix on regulations, administration and operation of and ESOP
New financial statements
Once cleared by FinREC will be sent out for comment
Next working on auditing content to be taken to the ASB
Employee Benefit Plan Audit Quality Center
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ESOP Issues
Accounting Issues
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Financial statement presentation for a leveraged ESOP
Reporting Allocation of Shares to Participant Accounts
Investments—fair value vs. fair market value
Forfeitures
Employer advances
Allocation of plan activity to pay current debt service
Pass through dividends
Floor price protection
Financial statement disclosures
Previously approved financial statement presentation and
disclosures
Employee Benefit Plan Audit Quality Center
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ASU 2014-15—Going Concern
Effective for periods ending on or after Dec. 15, 2016
AV-C section 570, The Auditor’s Consideration of an
Entity’s Ability to Continue as a Going Concern
• Plan’s ability to meet its obligations
• Reasonable period of time
Plan Sponsor’s Financial adversities
Plan liquidation
Auditor’s Report
• Emphasis-of-matter paragraph
• Wording: substantial doubt and going concern
Employee Benefit Plan Audit Quality Center
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SSARS No. 21 Statements on Standards for
Accounting and Review Services
Issued October 2014
Effective for periods ending on or after December
15, 2015. Early implementation is permitted.
Comprises four sections
• Section 60, General Principles for Engagements Performed in
Accordance with SSARS
• Section 70, Preparation of Financial Statements
• Section 80, Compilation Engagements
• Section 90, Review of Financial Statements
Employee Benefit Plan Audit Quality Center
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SSARS No. 21
Section 70 applies when the accountant is engaged
to prepare financial statements but is not engaged to
perform an audit, review or a compilation on those
statements
• Requires a legend on each page stating no assurance is provided
• Requires an engagement letter
• Does not require the accountant to be independent
Section 80 retains the existing requirements for
compilations largely unchanged
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Accountant is engaged to perform a compilation engagement
Always requires a report which has been streamlined
Report is modified whenever independence is impaired
Requires an engagement letter
Employee Benefit Plan Audit Quality Center
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On the Horizon - Investment Related
ASU 2014-11 - Transfers and Servicing (Topic 860)
ASU 2014-16 Derivatives and Hedging (Topic 815)
Determining Whether the Host Contract…is more
akin to Debt or to Equity
Exposure Draft - Hierarchy Disclosures for Certain
Investments Measured at Net Asset Value
Employee Benefit Plan Audit Quality Center
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Affordable Care Act
Anita Baker, CPA
CliftonLarsonAllen
LLP
Employee Benefit Plan Audit Quality Center
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Key Take-Aways
The ACA is a complex law that impacts all
individuals, businesses and organizations, including
governmental entities
The implementation of the ACA will be a challenge
for plan sponsors
Plan auditors have the knowledge and skills to
assist plan sponsors with these challenges
Plan auditors should ask key questions to determine
the plan sponsor’s compliance with the ACA
Employee Benefit Plan Audit Quality Center
General: What is the ACA Really Doing?
Signed into law March 2010
Applies to all businesses in the US, including
governmental entities
Requires almost all individuals to obtain health
insurance coverage or pay a penalty
Establishes health insurance exchanges
Large employers may have to pay a penalty, if they
don’t offer full-time employees affordable, minimum
level health insurance after 1/1/2015, some excepted
until 1/1/2016
Implementation details continue to be outlined
42
Employee Benefit Plan Audit Quality Center
General: Penalty Implementation Timeline
2015
2016
2017
• All applicable large employers must offer coverage to at least 70% of its full-time
employees to avoid $2,000 penalty; $3,000 penalty may still apply for uncovered
• For employers with 100 or more employees, $2000 penalty applies after the first
80 full-time employees if no insurance offered.
• No penalties for employers with 50-99 employees, who meet certain criteria
• No penalties between January and Plan Year start for certain non-calendar year
plans.
• All employers with 50 or more employees must offer coverage to at least 95% of
full-time employees to avoid penalties
• $2000 no insurance penalty is assessed after first 30 FT employees (no longer 80)
• SHOP open to all employers with fewer than 100 employees
• Information Return for 2015 to be filed with IRS
• SHOP Coverage open to all small and large employers
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Employee Benefit Plan Audit Quality Center
General: Transition Relief
No Penalties for Certain Employers With 50 – 99 Employees
Criteria employers must meet:
Has 50 – 99 FT employees plus FTEs
Made no reduction* in its workforce
Previously-offered health coverage is maintained
Certify their eligibility for transition relief
44
Employee Benefit Plan Audit Quality Center
Cost: Fees
Type
When?
Who?
How Much?
Patient-Centered
2013
Outcomes Research
Fee
Affects all plans,
but self-insured file
Form 720
Year 1: $1 / life
Year 2: $2 / life
After: Indexed
Transitional
Reinsurance Fee
2014
Insurers & TPAs pay
2014: $63 / ee &
dependent
2015: $42
2016: $26
Health Insurance
Industry Tax
2014
Insurance
companies
Estimated 2-4% of
premiums
Cadillac Plan Tax
2018
High-cost plans
40% tax on excess
over threshold
Employee Benefit Plan Audit Quality Center
Cost: “Shared Responsibility” Penalty
Penalty only assessed if a FT employee
receives Exchange subsidies.
No or Inadequate Insurance Penalty
• $2000 x each full-time worker
Unaffordable Employer Coverage Penalty
• At least, $3000 x # of full-time employees who receive exchange
subsidies
• Maximum penalty = $2000 x each full-time employee (except for
first 30 full-time workers) penalty
• No penalty for Medicaid eligible employees
Employee Benefit Plan Audit Quality Center
Compliance: Reimbursement Programs
Short Answer: Gone for 2014 and beyond
Penalty for Noncompliance: $100/day/participant
Exceptions:
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Integrated with approved group plan
Treat reimbursements as taxable wages (income & FICA)
Integrate with group insurance through SHOP exchange
One-employee plans
Ancillary benefit plans
Retiree-only plans
Employee Benefit Plan Audit Quality Center
Compliance: Group Health Plans 2014
December 5
• Deadline to submit enrollment information for the Transitional
Reinsurance Fee to HHS
December 15
• Deadline to provide Summary Annual Report (if 5500 extension
granted, otherwise September 30)
December 31
• Deadline to execute the required amendment limiting the
maximum annual health flexible spending account (FSA) salary
reduction to $2,500
• Deadline to execute the optional amendment adopting a carryover feature for a health FSA
Employee Benefit Plan Audit Quality Center
Compliance: Group Health Plans 2014
Annual Notices
• Plan sponsors should ensure all required annual notices have
been provided (for example, CHIP and WHCRA notices)
Exchange Notice
• Plan sponsors must provide notice to all employees of the
existence of the Health Marketplace Exchange (HME) that the
qualified employees may be eligible for a subsidy at the
exchange.
Cobra Notice
• The COBRA notice should be updated to reflect changes made
in the most recent model notices related to the HME.
Employee Benefit Plan Audit Quality Center
Compliance: Group Health Plans 2015
January 31
• Deadline to provide Form W-2 with required ACA information
January 2015
• Payment of first installment of transitional reinsurance fee for
2014 (invoiced in December with payment due 30 days after
invoice date)
Employee Benefit Plan Audit Quality Center
Compliance: How to prepare for 2015
Employer Shared Responsibility (4980H)
• Establish a system for identifying full time employees (those
working 30 or more hours per week)
• Adopt an hours counting methodology for variable, part-time,
temporary and seasonal employees
• Adopt a monthly measurement or look-back measurement
method
• Document plan eligibility rules
• Test plans for affordability (9.56% of W-2 wages)
• Ensure plan meets the 60% minimum value
• Examine the design of any health reimbursement account/
health FSA plans to ensure compliance with ACA
Employee Benefit Plan Audit Quality Center
EBPAQC Resources
Jodi Malis, CPA
Hancock Askew & Co.,
LLP
Employee Benefit Plan Audit Quality Center
52
Use Your EBPAQC Resources
EAlerts
Plan Advisories
Webinars
Primers
Website
Tools
Resource
Centers
Employee Benefit Plan Audit Quality Center
Member-tomember Forum
53
EBPAQC Website—aicpa.org/ebpaqc
Employee Benefit Plan Audit Quality Center
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Sharing Access to the Center Website
with Staff
When your firm joined the Center you received a
welcome email that contained your firm’s unique
activation link.
You will need this link both to activate your account and
to share access with others.
If you no longer have that email, please contact the
Center at EBPAQC@aicpa.org and request that the link,
along with instructions to activate the link, be resent.
There is no limit to the number of individuals in your firm
to whom you grant access
Employee Benefit Plan Audit Quality Center
55
EAlerts
24 EAlerts issued in the past year
Are you sharing EAlerts with your staff? Tips for sharing included on website
Also archived on EBPAQC website
Employee Benefit Plan Audit Quality Center
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Upcoming EBPAQC Webinars
All EBPAQC webinars are 1:00pm -3:00 pm Eastern
February 24
Designated Partner Planning Live Forum (Rebroadcast)
March 11
11-K Audits Live Forum
April 24
Managers and Supervisors Planning Live Forum
May 5
Using the EBPAQC SOC 1 Tool (Rebroadcast)
May 7
Designated Partner Planning Live Forum (Rebroadcast)
May 1,8,15, & 27
401(k) Basics Live Forum- 4 Parts
May 28
Managers and Supervisors Planning Live Forum (Rebroadcast)
June 9
Designated Partner Planning Live Forum (Rebroadcast)
June 16
Common Pitfalls in EBP Investment Accounting and Reporting f
June 23
Common Pitfalls Auditing EBP Investments
See EAlert #324 Save-the-Dates
Look for future EBPAQC EAlerts for registration information
All EAlerts are archived on the Center website
or
Employee Benefit Plan Audit Quality Center
57
Accounting and Audit Resource Centers
Auditor
Communications
Internal Controls
EBP SOC1 Reports &
Service
Organization
Plan Investments
Upd
Fraud in Employee
Benefit Plans
Parties in Interest
and Prohibited
Transactions
Limited Scope
Audits
Auditor
Independence
Defined Benefit
Pension Plans
Health and Welfare
Benefit Plans
ESOPs
Multi-employer
Plans
Form 11-K Audits
403(b) Plans
Employee Benefit Plan Audit Quality Center
58
EBPAQC “Topix” Primers
Limited Scope
Audits
Insurance
Company
Products
Parties in
Interest/
Prohibited
Transactions
Alternative
Investments in
Employee
Benefit Plans
Multi-employer
plans
Cash Balance
Plans
Tax &
Compliance
Issues for
401(k) Plans
Plan
Investments in
Bank Collective
Investment
Funds
Stable Value
Funds and
Investment
Contracts—An
Overview
ESOPs
403(b) Plans
Plan Sponsor Subsidies
Under the Medicare
Prescription Drug,
Improvement and
Modernization Act
Health and
Welfare
Employee
Benefit Plans
Employee Benefit Plan Audit Quality Center
New!
59
Member-to-Member Discussion Forum
8 forums
3,912 participants
2,674 topics posted
Valuable resource
Employee Benefit Plan Audit Quality Center
60
Common EBP Audit Deficiencies
Employee Benefit Plan Audit Quality Center
61
Plan Advisories

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The Importance of Hiring a Quality EBP Auditor (New)
EBP Financial Statement Audits Plan Investments
Internal Controls
Monitoring Outsourced Recordkeeping and Reporting
Understanding Auditor Communications
Employee Benefit Plan Audit Quality Center
62
EBP Fraud Tool
DOL Criminal Enforcement Cases
Updated—Summary of over 185 EBP
fraud cases
Employee Benefit Plan Audit Quality Center
63
Internal Control Communications Examples
Tool
Updated—Over 135 example comments
• Oversight of the
Financial Reporting
Process
• Investments
• Selecting,
Monitoring, and
Valuing Plan
Investments
• Securities Lending
• Participant Loans
• Bank Reconciliations
• Claims Processing
• Forfeitures
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•
Participant Accounts
Monitoring
Contributions
Employee
Contributions
Employer
Contributions
Eligibility
Distributions
Benefit Payments
Vesting Matters
Third Party Service
Providers
Multiemployer Plans
• Monitoring and
Review
• Payroll/Personnel
Records and Census
Data
• Maintaining Records
• Demographic Data
• Census Data
• Other
• Plan Fees
• Parties-in-Interest
• Uncashed Checks
• Plan Amendments
Send us additional examples! Email to Center mailbox at ebpaqc@aicpa.org
Employee Benefit Plan Audit Quality Center
64
SOC 1 Review Documentation Tool
Use to help document review of SOC 1 reports
issued in accordance with SSAE No. 116
• Summarize procedures and findings related to controls at a
service organization relevant to plan audits
Employee Benefit Plan Audit Quality Center
65
New Tools
 Nonattest services independence documentation
 Documentation of review of actuarial report
Employee Benefit Plan Audit Quality Center
66
Other Tools and Aids
Firm Preparedness Checklist for
Employee Benefit Plans
Internal Inspection Tool
Responding to Requests for Proposals
Marketing Toolkit
Employee Benefit Plan Audit Quality Center
67
DOL Update
Ian Dingwall, CPA
Chief Accountant
DOL
Employee Benefits Security
Administration
The views expressed are those of the speaker and do not
necessarily represent the official position of the Department
Employee Benefit Plan Audit Quality Center
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69
Overview
EBSA Audit Quality Study
New Initiatives
Enforcement Initiatives
DOL Resources
Employee Benefit Plan Audit Quality Center
69
Audit Quality Study
Employee Benefit Plan Audit Quality Center
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71
Statistical Sample of 400 Plan Audits
2011 Form 5500 filings
6 strata based on size of EBP practice
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1-2 plans
3-5 plans
6-24 plans
25-99 plans
100-749 plans
750 + plans
1 audit in lowest 2 strata, 5 in all others
Employee Benefit Plan Audit Quality Center
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Our Sample
Type of Audit
• 80% = Limited Scope
• 19% = Full Scope
• 1% = Other
Plan Type
• 89% = DC Pension Plan
• 6% = DB Pension Plan
• 5% = Welfare Plan
Sponsor Type
• 95% = Single Employer
• 3% = Multi-Employer
• 2% = Multiple Employer
EBPAQC Member
• 55% = Yes
• 45% = No
Employee Benefit Plan Audit Quality Center
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Findings
Employee Benefit Plan Audit Quality Center
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Size of EBP Practice Matters
Correlation between a firm’s EBP practice and
deficient work
Nearly 75% of plan audits were deficient in firms
who audit 1-2 plans annually
Deficient audits in this strata also had many more
deficiencies
• 75% of deficient plan in audits in the 1-2 strata had deficient
audit work in 5 or more areas
• Uniformly higher deficient work in all audit areas
Less EBP specific training by firms in this strata
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Practice Monitoring/Peer Review are not
Useful Identifiers of Quality EBP Audits
Over 90% of firms in 6-99 strata who performed
deficient EBP audits received clean peer review
reports
In 4 of 6 strata, firms had clean peer review reports
where we identified deficient EBP audit work
• Nearly 70% in 1-2 strata
• 85% in the 3-5 strata
In 4 of 6 strata, audits with 5+ deficiencies were
performed by firms with clean peer review reports
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Other Useful Findings
No meaningful correlation between audit fees and
the quality of audit work
EBPAQC member firms performed higher quality
work than non member firms
Audit work is often of lesser quality in engagements
where firms have less expertise
Problematic audit areas continue to be the same
EBP-specific areas as previously identified
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Referrals of Deficient Audit Work
131 referrals made to the AICPA’s Professional
Ethics Division
13 referrals made to state boards of public
accountancy
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What Is Our Current Focus?
High Risk Audit Engagements
• Health and Welfare Plans
• ESOPs
• Plans with hard-to-value assets
Reinspections of CPA firms
Continued Outreach to EBP Stakeholders
Employee Benefit Plan Audit Quality Center
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New Initiatives
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Peer Review
Are CPAs complying with state peer review
licensing requirements?
Practitioners in states with peer review
requirement
Provide evidence that an acceptable peer review
was performed
CPAs performing audits (in the Form 5500
database) –that are not in the AICPA’s peer review
records
• AICPA has found numerous CPAs performing attest engagements that
have not been enrolled in the peer review program
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Licensure
Are firms properly licensed where they
practice?
Rules vary by state
NASBA website – auditor mobility
NASBA provided list of plan auditors to states
• States reviewing to see if CPAs are properly licensed
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Enforcement Initiatives
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Reporting Compliance Enforcement
Reporting of fidelity bonding status
Missing audit reports
Compliance with Small Pension Plan Audit Waiver
requirements
DFVC program compliance
Plan asset accountability
Health & welfare plan non-filers
Stop filers (cooperative initiative with IRS)
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Health & Welfare Benefit Plans
Benefit claims adjudication/payments is very complex and
there is inherently a high risk of errors, misstatements or
fraud. Plan accordingly.
Must be paid in the correct amount timely, in accordance
with plan documents
Only to or on behalf of eligible, covered persons entitled to
receive benefits
Properly recorded and described in plan financial
statements
Type 2 SOC 1 reports may not include controls over
whether the claim or benefit payment was appropriately
calculated based on the provisions of the plan instrument.
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DOL Resources
www.dol.gov/ebsa
• For DOL publications, FAQs, copies of the Form 5500, instructions,
and related schedules
EBSA Office of the Chief Accountant 202-693-8360
EBSA Office of Regulations and Interpretations 202693-8500
• For questions about ERISA reporting, filing or other regulatory
requirements
DOL EFAST Help Center 1-866-463-3278
• For questions regarding the Form 5500 or related schedules
Employee Benefit Plan Audit Quality Center
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Common and Recurring
Operational Issues
Lisa Beard-Niemann
Director,
Employee Plans Examinations
Internal Revenue Service
Employee Benefit Plan Audit Quality Center
Rance Buss, CPA
Weaver
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Ch-Ch-Ch-Changes…
EP Exams Director
• Lisa J. Beard-Niemann
EP Rulings & Agreements Director
• Karen Truss
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Employee Benefit Plan Audit Quality Center
www.irs.gov /retirement
Ch-Ch-Ch-Changes…
Announcement 2014-34
• Redistribution of work from Guidance/Technical to Counsel
• Work moving to Counsel include
- Revenue rulings & revenue procedures
- Published guidance
• Work staying in TE/GE include
- Model language
- Limited rulings
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Employee Benefit Plan Audit Quality Center
www.irs.gov /retirement
EP Examinations – FY15
IRC 401(k) Plans
• Most popular plans
• Continue to examine returns via
- General examinations
- EP Compliance Unit
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Employee Benefit Plan Audit Quality Center
www.irs.gov /retirement
401(k) Plans – Recurring Errors
Non-amender/Late amender
Failure to follow the terms of the plan
• Definition of “Compensation”
• Matching contributions
Nondiscrimination testing (ADP/ACP)
Omitting eligible employees
IRC 402(g) limits
Timely deposit of employee elective deferrals
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Employee Benefit Plan Audit Quality Center
www.irs.gov /retirement
EP Examinations – FY15
IRC 403(b) Plans
• A slight increase of audits from the past few years
- Public schools
- Colleges and universities
- Hospitals
- Tax-exempt organizations
• All five areas bringing in new agents to work 403(b) examinations
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Employee Benefit Plan Audit Quality Center
www.irs.gov /retirement
403(b) Plans – Recurring Errors
Universal Availability
• Public schools
• Colleges and universities
Excess Contributions (all market segments)
• Age 50 catch-up
• 402(g)
Improper Hardship Distributions
• Public Schools
• Hospitals
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Employee Benefit Plan Audit Quality Center
www.irs.gov /retirement
Trending Examination Issues
Invalid Social Security Numbers
• Agents finding SSNs that are
- Not a valid number
- For a dead person
- For another person
• Difficult to distribute benefits
• Could affect
- Cash-outs
- Required minimum distributions
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Employee Benefit Plan Audit Quality Center
www.irs.gov /retirement
Trending Examination Issues
Document Retention
• Plan sponsors required to retain documentation to substantiate
compliance
- Hardship distributions
- Participant Loans
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Employee Benefit Plan Audit Quality Center
www.irs.gov /retirement
EP Rulings & Agreements - FY15
Pre-Approved Program
• Announcement 2014-41
- Extension for DB specimen submission window to June 30, 2015
• Coming soon: revenue procedures and Listings of Required
Modifications (LRMs) for
- Cash balance plans
- ESOPs
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Employee Benefit Plan Audit Quality Center
www.irs.gov /retirement
EP Rulings & Agreements - FY15
Determination Letter (DL) Program
• Announcement 2014-41
- Cycle D two-day extension to February 2
• Announcement 2015-1
- Promoting case processing efficiency
- Incomplete applications
- Request for additional information
• Notice 2014-77
- Cumulative List of Changes
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Employee Benefit Plan Audit Quality Center
www.irs.gov /retirement
EP Rulings & Agreements - FY15
Determination Letter Submission Tips
• Use cover letter effectively – tell us
- Submitting two related plans
- The urgent business need (filing off-cycle)
- Affiliated service group ruling request
• Avoid delays
- Do not bind/fold/staple plan documents
- Use 81/2 X 11 inch paper
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Employee Benefit Plan Audit Quality Center
www.irs.gov /retirement
Other Items of Interest
IRA One-Rollover-Per-Year
• Announcements 2014-15 and 2014-32
Form 5500EZ Penalty Relief Program
• Ends June 2, 2015
• Revenue Procedure 2014-32
Treatment of Marriages of Same-Sex Couples for
Retirement Plan Purposes
• Effective June 26, 2013
• Notice 2014-19
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Employee Benefit Plan Audit Quality Center
www.irs.gov /retirement
IRS Website
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Employee Benefit Plan Audit Quality Center
www.irs.gov /retirement
Employee Plans Compliance
Resolution System
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Employee Benefit Plan Audit Quality Center
www.irs.gov /retirement
Question & Answer
Session
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AICPA EBP Conferences and Workshops
AICPA Employee Benefit Plans Conference
• May 18 –20, 2015 – National Resort and Convention Center,
National Harbor, MD
• Two ways to attend- On-Site and Virtual (Online)
• May 17 pre-conference workshops on EBP Audit Basics and
Form 5500
AICPA Employee Benefit Plans Audit Workshop
• June 5-6, 2014 ; New York, NY; AICPA Boardroom
AICPA EBP Accounting, Auditing and Regulatory Update
Conference
• December 7-8, 2015 - Washington, DC
More information at cpa2biz.com/ebp
888.777.7077
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CPE Certificate
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