Academic journal article Journal of Accountancy

Auditing Employee Benefit Plans

Academic journal article Journal of Accountancy

Auditing Employee Benefit Plans

Article excerpt

Auditing employee benefit plans is not a risk-free activity. The American Institute of CPAs professional ethics division has released a summary of the most frequent technical standards violations in 52 employee benefit plan audit engagements investigated by the division after referral from the Pension and Welfare Benefit Administration (PWBA) of the U.S. Department of Labor.


Under the Employee Retirement Income Security Act of 1974 (ERISA), employee benefit plans with more than 100 participants are required to have annual audits conducted in compliance with generally accepted auditing standards. The financial statements and audit reports accompany each plan's form 5500, which is forwarded annually to the Department of Labor.

The PWBA has a continuing program to ensure submitted financial statements and reports meet applicable AICPA and ERISA standards. In August 1989, PWBA initiated a program to refer to the AICPA professional ethics division the employee benefit plan audits the PWBA deemed substandard.


The ethics division's technical standards subcommittee is responsible for conducting investigations of Labor Department referrals. The subcommittee formed a subgroup of 10 members experienced in pension plan audits to ensure referrals are handled consistently and expeditiously. Each investigation is conducted according to established division procedures, giving the members involved an opportunity to discuss the issues raised.

While the professional ethics division does not disclose information about ethics investigations, the division believes making practitioners aware of the most frequent deficiencies will enable them to avoid the pitfalls of substandard performance. Practitioners also can use the information in planning and performing future engagements.


Exhibit 1, below, shows a breakdown of the most frequently encountered technical standards violations in investigations of 52 benefit plan audit engagements. …

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