Over the past couple of years there has been much discussion in the audit world about the low quality of employee benefit plan audits, but there are some new metrics in place that may help plan administrators better gauge the quality of their auditors.
Discussions started back in May 2015 when the U.S. Department of Labor (DOL) issued a comprehensive report criticizing the quality of employee benefit plan audits by CPAs and the continued lack of improvement. The report stated that the DOL’s Employee Benefit Security Administration found serious deficiencies in 39% of the audits of employee benefit plans it examined, resulting in significant amounts of retirement dollars and number of plan participants at risk. Subsequently, the DOL followed up with letters and emails to employee benefit plan administrators, urging them to exercise care in selecting a quality CPA firm to perform the employee benefit plan audit in accordance with professional auditing standards.
But the American Institute of Certified Public Accountants (AICPA) is also getting involved, pledging to help fix the problem from within the industry. In the spring of 2016, the AICPA began offering CPAs the option to earn intermediate and advanced certifications specific to employee benefit plan audits:
These certifications are intended to help enhance audit quality by demonstrating to clients, prospects and peers a CPA’s capabilities and competencies in the area of employee benefit plans — making it easier for plan administrators to choose top-quality auditors.
The programs are based on the AICPA’s Competency Framework: Employee Benefit Plan Auditing, with a focus on common deficiency areas, including those mentioned in the DOL’s May 2015 report. To earn each certificate, CPAs must pass a lengthy, competency-based exam. Once completed and passed, the CPAs earn a certification badge, demonstrating their commitment to employee benefit plan audit quality along with their level of knowledge and expertise in the area.
The DOL will certainly continue to focus on the audit quality of employee benefit plans. Plan administrators may want to consider adding one or more of these certifications to their “required qualifications checklist” for their plan auditors.
Contact Trinette Simon at firstname.lastname@example.org or a member of your service team to discuss this topic further.
Cohen & Company is not rendering legal, accounting or other professional advice. Information contained in this post is considered accurate as of the date of publishing. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts, circumstances and current law.
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