Audit Quality Leader: EBSA's Chief Accountant Discusses Major Changes Afoot in Employee Benefit Audits

Journal of Accountancy, September 2008 | Go to article overview

Audit Quality Leader: EBSA's Chief Accountant Discusses Major Changes Afoot in Employee Benefit Audits


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Ian Dingwall is the chief accountant of the Department of Labor's Employee Benefits Security Administration (EBSA). Dingwall is EBSA's primary adviser on accounting and auditing issues stemming from the agency's responsibilities under the Employee Retirement Income Security Act of 1974 (ERISA), the Federal Employee Retirement Security Act, and the Pension Protection Act of 2006 (PPA).

Dingwall and his staff of more than 40 reach out to a broad array of plan professionals including plan sponsors, plan administrators, attorneys, auditors and other service providers to ensure they have the information they need to fulfill their responsibilities to the plans and their participants.

Dingwall recently answered the JofA's questions about employee benefit plan accounting and auditing.

JofA: You've been the chief accountant for the Department of Labor's Employee Benefits Security Administration since 1988. What significant changes have you seen over the past 20 years?

Dingwall: Obviously, there have been many, many changes over the last 20 years. It would be hard to put together a list of all of those changes. Certainly, the changes we're seeing now with implementation of the Pension Protection Act would be high on the list. We've also over this time period established the Office of the Chief Accountant as a vibrant and viable organization within the Department of Labor.

I also believe we've been instrumental in helping the profession establish the Employee Benefit Plan Audit Quality Center and in ensuring that peer reviewers are focused on employee benefit plans. These are important initiatives because they are being undertaken by the profession itself.

JofA: What are the biggest challenges facing pension plans in the near future?

Dingwall: In the immediate future, one of the more significant changes involves new filing requirements for 403(b) plans. Due to the newly imposed audit requirement, these plans will now have to put together plan documents and recordkeeping systems that will be subject to the scrutiny of a financial statement audit. This new requirement is for the 2009 plan year, with reports being filed with the DOL in 2010.

Other challenges for the profession include: implementing the new audit risk standards for audits of employee benefit plans, and the changes mandated by the Pension Protection Act.

JofA: The Pension Protection Act made a number of changes to pension accounting. How are these changes impacting plan sponsors and their auditors?

Dingwall: Automatic enrollment and default investment should increase the number of people saving for retirement. I think the disclosure part of the PPA, which includes requiring the Form 5500s to be available on Web sites and the electronic filing of the forms, will create more transparency for plan participants who want to see how their plans are operated.

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JofA: What is the most significant accomplishment the accounting and auditing profession has made in recent years in the employee benefit plan area?

Dingwall: Maybe the most significant accomplishment is the profession is no longer viewing these audits as "commodity-type" audits. I think the profession has gotten serious in terms of looking at these audits from a business perspective. Many firms have decided not to do these audits because it does not make economic sense to perform only a few employee benefit plan audits. It is significant that so many firms have become members of the Audit Quality Center and are investing in training their staffs so that the audits are done in accordance with generally accepted auditing standards.

JofA: Your office is responsible for inspecting CPA firms that audit more than 100 employee benefits plans. What do you look for when you do inspections, and what trends are you seeing?

Dingwall: Our inspection program is both a top-down and bottom-up review of a firm, to see how it operates its employee benefit plan practice. …

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