Employee Benefit Plan Audit Peer Reviews Preparing for Risk Assessment, Control Document Inspection, and Other Peer Reviewer Concerns Today’s faculty features: 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific WEDNESDAY, MAY 13, 2015 Presenting a live 110-minute webinar with interactive Q&A Jessie Kanter, Manager of Quality Assurance, BlumShapiro, Providence, R.I. Susan J. Peirce, Principal, Apple Growth Partners, Akron, Ohio Tricia A. Van Vliet, Senior Audit Manager, Hungerford Nichols CPAs + Advisors, Grand Rapids, Mich. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10. NOTE: If you are seeking CPE credit , you must listen via your computer — phone listening is no longer permitted.
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Employee Benefit Plan Audit Peer Reviews Preparing for Risk Assessment, Control Document Inspection, and Other Peer Reviewer Concerns
Presenting a live 110-minute webinar with interactive Q&A
Jessie Kanter, Manager of Quality Assurance, BlumShapiro, Providence, R.I.
Susan J. Peirce, Principal, Apple Growth Partners, Akron, Ohio
Tricia A. Van Vliet, Senior Audit Manager, Hungerford Nichols CPAs + Advisors,
Grand Rapids, Mich.
The audio portion of the conference may be accessed via the telephone or by using your computer's
speakers. Please refer to the instructions emailed to registrants for additional information. If you
have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.
NOTE: If you are seeking CPE credit, you must listen via your computer — phone listening
is no longer permitted.
Tips for Optimal Quality
Sound Quality
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problem.
If you dialed in and have any difficulties during the call, press *0 for assistance.
NOTE: If you are seeking CPE credit, you must listen via your computer — phone
listening is no longer permitted.
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press the F11 key again.
FOR LIVE EVENT ONLY
Continuing Education Credits
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For CPE credits, attendees must listen throughout the program, including the Q &
A session, and record verification codes in the corresponding spaces found on the
CPE form, in order to qualify for full continuing education credits. Strafford is
required to monitor attendance.
If you have not printed out the “CPE Form,” please print it now (see “Handouts”
tab in “Conference Materials” box on left-hand side of your computer screen).
Please refer to the instructions emailed to registrants for additional information.
If you have any questions, please contact Customer Service at 1-800-926-7926
ext. 10.
FOR LIVE EVENT ONLY
• EBSA Audit Quality Initiatives
• Reporting Compliance Initiatives
• DOL Resources
• AICPA Response
DOL Emphasis Continues to be on Deficient Audits and Impact on Peer
Review
DOL Findings/AICPA response 2014 Findings – not formally announced but certain
information has been shared. Slides referring to this reference point are marked (2014)
Prior to 2014 – slides referring this reference point are marked (P 2014) in lower left corner
AICPA report on Employee Benefit Plans/Peer Review presented by Michael Auerbach (EBSA);Marilee Lau (Retired KPMG); James W. Brackens, Jr. (VP –Ethics and Practice Quality AICPA) and others dated 8/8/14 - slides referring to this reference point are marked (AI 8/8) in lower left corner
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Audit Quality Remains Problematic
Deficiency rates are unacceptable – 32%
Large variability depending on EBP practice size
Firms with large EBP practices tend to meet professional standards
Firms with limited EBP practice have a higher rate of deficient professional work
Fee pressure continues
“Dabblers”
(P2014) 6
DOL – 2014 Audit Sampling During October 2013 – September 2014, the DOL sampled a
population of 400 audit engagements. Those engagements were grouped together based on the: Size of the audit firm's employee benefit plan audit practice Type of plans audited
The following summarizes some preliminary findings: Overall deficiency rates and deficient audits are consistent with
historical data trends; AICPA Employee Benefit Plan Audit Quality Center (EBPAQC) members
have a lower deficiency rate than Non-EBPAQC members; and Deficient audit areas continue to be employee benefit plan specific,
including: Participant data Contributions Plan obligations Benefit payments Party-in-interest transactions
(2014) 7
EBP Frequent Violations General Audit Failures
The auditor did not obtain sufficient appropriate audit evidence
Participants’ data – multiemployer plans, participant allocations
Certifying entity is not qualified
Overreliance on service auditor
Testing over information given to the actuary
Evaluation qualifications and reputation of actuary
Frozen plans
One or more procedures missing in many areas
Inadequate documentation of audit procedures
Inadequate audit programs and/or planning
(2014) 8
EBP Frequent Violations Disclosures – H&W Plans
The benefit obligations exceeded the net assets of the plan but the notes did not disclose the method of funding this deficit
The assumed health care cost-trend rates used to measure the expected costs of benefits covered by the plan for the next year
The effect of a one-percentage-point increase in the assumed health care cost-trend rates for each future year on the postretirement benefit obligation
Changes in benefit obligations
(2014) 9
EBP Frequent Violations Supplemental Schedules
Schedule of Assets Held for Investment Purposes
Not attached to the financial statements
Improperly excluded participant loans and other assets or loan terms not disclosed
Did not properly identify persons known to be party-in-interest to the plan in Column (a)
(2014) 10
AICPA response to 2014 DOL findings
“The department hasn’t said much publicly aside from indicating the study is in the works and a report is forthcoming.” However, the DOL has said it is apt to report that one-third or so audits have quality issues. “Poor audit work is a concern to us. It is unacceptable. It is something we take very seriously.”
(Sue Coffey, AICPA’s senior vice president for
public practice and global alliances. 4/15/15)
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AICPA response (continued) Creation of competency framework for employee
benefit plans will help practitioners assess whether they have the competency needed for employee benefit plan financial audits and, if not, what curriculum they need to gain competency.
Early 2016, the AICPA will be launching an employee benefit plan certificate program to allow practitioners to show their competency.
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DOL Project – Current Statistics
2,196 firms PRISM records did not indicate an EBP audit was included
718 firms determined to be in compliance
492 firms failed to properly identify performance of EBP audit
9 firms were not enrolled or indicated no A&A and were referred to AICPA Professional Ethics Division (AICPA members) or AEs (non-AICPA members)
977 firms remaining to investigate
(AI 8/8) 13
AICPA Response to DOL and Others
Concept Paper
Evolving the CPA Profession’s Peer Review Program for the Future
A provocative vision of what practice monitoring could become
Released for comment: Dec. 15, 2014
Feedback due: June 15, 2015
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ERISA Plan Audit Universe
82,579 plan audits
7,358 CPA firms perform audits
$6.3 trillion in plan assets subject to audit
(P2014) 15
Tale of Two Worlds
50% of Plan Auditors:
Audit 1 or 2 plans 6% of all plans audited 2 million participants
1% of Plan Auditors:
Audit 100 or more plans 42% of all plans audited 91 million participants
(P2014) 16
Referrals of the Most Egregious Work
AICPA Ethics Division
Approximately 800 referrals
AICPA’s focus is on rehabilitating the practitioner
EBSA receives status updates of referrals
State Boards of Public Accountancy
Over 100 referrals
Referrals made when AICPA has no jurisdiction
Resources vary widely among states to handle referrals
(P2014) 17
DOL Cases Resolved by Firm Size
Total
Severe
Deficiencies
Firms out
of EBP
Audits*
Small Firms (2 -10 CPAs) 74% 85% 39%
Medium Firm (11-20 CPAs) 9% 66% 17%
Large Firm (21 - 74 CPAs) 13% 59% 14%
Large Firm (75+ CPAs, Big Four and
Major Firms) 4% 9% -
Totals 100% 41% 32%
*Sanctions must be completed if they return to performing EBP audits
Consider using outside professionals to perform internal inspections
Specialized ERISA training for your team
If the outcome is poor, hire a consultant to do a more in-depth review of your ERISA practice and engagements
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Presenter’s Bio Susan J. Peirce, CPA, MTax
Sue Peirce is a principal and leads the employee benefits audit and specialty services team at Apple Growth Partners. Sue has led the development of numerous services at the firm including specialty audit services, benefit plan design and administration, and SOC engagements. She has implemented Lean principles in the delivery of audit services to achieve more efficient processes and outcomes in audit engagements. Sue regularly writes articles, hosts webinars, and has presented at numerous events including the AICPA National Employee Benefit Plan Conference, Matrix Financial Solutions Annual Conference, and various state CPA societies.
In addition to her audit work, she provides consulting services to business owners and professionals with a special emphasis on benefit plan services. Her expertise includes a focus on qualified retirement plans and related design, compliance, non-discrimination testing, distribution and reporting issues.
Sue is a former member of the AICPA Employee Benefit Plan Audit Quality Center Executive Committee.
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Strafford Webinar Employee Benefit Plan Audit Peer Reviews
Understanding Reviewer Expectations Based Upon Applicable Standards and Avoiding Audit Documentation Issues
Tricia A. Van Vliet, CPA Hungerford Nichols CPAs + Advisors
Tricia A. Van Vliet, CPA Hungerford Nichols CPAs + Advisors (616) 949-3200 [email protected]
Tricia has 20 years of experience with national public accounting firms where
she developed her specializations in the areas of ERISA financial reporting and
investment securities. She recently joined Hungerford Nichols CPAs + Advisors
after completing 8 years as a director in the audit and quality control
departments of a national firm. As a lead technical resource, Tricia developed
audit and accounting guidance, resources and training programs and was often
consulted by audit engagement teams, smaller accounting firms as well as
client personnel. Her passion for technical research and teaching has been a
tremendous asset in working with auditors and management of both public
and non-public companies to translate ever-evolving standards in a meaningful
and practical way. Tricia also takes great pride in the opportunities she has
been given to share her knowledge and expertise with the profession through
numerous national AICPA and state CPA society conference speaking
engagements, as well as serving on the AICPA Technical Standards
Subcommittee, the Champions Task Force supporting the AICPA Women’s
Initiative Executive Committee and the MICPA Employee Benefits Task Force.