The AICPA Auditing Standards Board (ASB) recently issued Statement on Auditing Standards (SAS) No. 136, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA. SAS No. 136 is the result of an effort to enhance the communicative value and transparency of the auditor’s report for ERISA plan financial statements, and to include performance requirements specific to auditing ERISA plans.
Effective communication in auditor’s reports has been a major focus for auditing standard setters, including the ASB, for the past few years. SAS No. 136 creates new reporting requirements and performance requirements for the highly specialized audits of ERISA financial statements.
1. The new standard includes new requirements in all phases of an audit of ERISA plan financial statements including:
2. Another significant change is that an audit performed pursuant to ERISA section 103(a)(3)(C) will no longer be referred to as a "limited scope audit" but rather going forward will be referred to as an "ERISA section 103(a)(3)(C) audit." ERISA section 103(a)(3)(C) continues to permit plan management to elect to exclude from the audit certain investment information a qualified institution holds and certifies. The SAS also clarifies what is expected of the auditor, including specific procedures when performing an ERISA section 103(a)(3)(C) audit, and establishes a new form of report that provides greater transparency about the scope and nature of the audit and describes the procedures performed on the certified investment information.
3. The key elements of the non-ERISA section 103(a)(3)(C) report (formerly referred to as “full-scope reports”) are the same as those in SAS No. 134 with the following exceptions:
The SAS takes effect for audits of ERISA plan financial statements for periods ending on or after December 15, 2020, and early implementation is not permitted. SAS No. 136 applies only to audits of employee benefit plans that are subject to ERISA. If you have any questions please contact me or your VonLehman employee benefit plan advisor.