DOL Update Lynne McMennamin, CPA Auditor DOL Employee Benefits - - PowerPoint PPT Presentation

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DOL Update Lynne McMennamin, CPA Auditor DOL Employee Benefits - - PowerPoint PPT Presentation

Sep 10, 2023 171 likes •419 views

DOL Update Lynne McMennamin, CPA Auditor DOL Employee Benefits Security Administration The views expressed are those of the speaker and do not necessarily represent the official position of the Department 2 Overview EBSA Audit Quality

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DOL Update

Lynne McMennamin, CPA

Auditor DOL Employee Benefits Security Administration

The views expressed are those of the speaker and do not necessarily represent the official position of the Department

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Overview

  • EBSA Audit Quality Study
  • New Initiatives
  • Enforcement Initiatives
  • On the Horizon – Emerging Issues
  • DOL Resources

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Audit Quality Study

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Statistical Sample of 400 Plan Audits

  • 2011 Form 5500 filings
  • 6 strata based on size of EBP practice
  • 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

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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

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Our Sample

  • Sponsor Type
  • 95% = Single Employer
  • 3% = Multi-Employer
  • 2% = Multiple Employer
  • EBPAQC Member
  • 55% = Yes
  • 45% = No

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Findings

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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
  • Re-inspections of CPA firms
  • Continued Outreach to EBP Stakeholders

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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

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Peer Review

  • 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

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Reporting Compliance Enforcement

  • 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

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Health & Welfare Benefit Plans

  • 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

  • n the provisions of the plan instrument.

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On the Horizon – Emerging Issues

  • New Actuarial Study Longevity

Improvements Considerations

  • FASB Simplification Project
  • Auditing Standards Board Project to Improve

Plan Audit Reports

  • EFAST 3 and Form 5500 Changes
  • New AICPA Audit Quality Center Tools

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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

202-693-8500

  • 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

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