| Dear Center Members: |
This alert contains information about:
- Annual Membership Requirements Compliance Questionnaire
- Example Internal Control Communications for Employee Benefit Plans
- FASB Delays Effective Date of Lease Accounting Standard
- Actuarial Mortality Improvement Scale MP-2019 and New Base Mortality Table Released
- Changes to 401(k) Hardship distribution requirements
- DOL Proposed Safe Harbor for Use of Electronic Media
- Special Member Benefit—December 9-10 Virtual EBP Accounting, Auditing and Regulatory Update Conference
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Annual Membership Requirements Compliance Questionnaire
On November 4, the EBPAQC emailed instructions for completing the annual mandatory membership requirements questionnaire, which must be completed by December 2. The email was sent to Designated Audit Quality Partners and Administrative Contacts of EBPAQC member firms as of September 30, 2019. If you did not receive instructions with the link to complete your firm's questionnaire, please contact the Center by email at ebpaqc@aicpa.org or call Cynthia Dillon at 202-434-9207.
Thank you to all member firms that have already completed the questionnaire. The Center staff appreciates your prompt response as well as the valuable feedback about how the Center can better help your firm.
Example Internal Control Communications for Employee Benefit Plans
The EBPAQC tool, Examples of Internal Control Communications for Employee Benefit Plans, can help your firm with communicating internal control matters found in plan financial statement audits to those charged with plan governance and others as required by AU-C section 265, Communicating Internal Control Related Matters Identified in an Audit. The tool contains over 55 example comments that may be useful in preparing required internal control communications, management letters, and other internal control communications. It is presented in Word format so the example comments can be cut, pasted, and edited according to individual facts and circumstances.
Click here to access the EBPAQC internal control communications tool.
FASB Delays Effective Date of Lease Accounting Standard
At its October 18 meeting, the Financial Accounting Standards Board (FASB) approved to delay the effective date of its standard on accounting for leases for private companies and certain other entities. The lease standard may affect multiemployer plans that lease property and equipment that are not considered plan investments (office space, office equipment or training facility space). For employee benefit plans that must comply with the lease accounting standard, the effective date is delayed one year to fiscal years beginning after December 15, 2020. Early adoption for the standard remains unchanged.
Click here for more information about the change in the effective date.
Actuarial Mortality Improvement Scale MP-2019 and New Base Mortality Table Released
On October 24 (revised October 25), The Society of Actuaries (SOA) updated the Mortality Improvement Scale (Scale MP-2019) that accompanies its most recent Mortality Table (RP-2014). In addition, the SOA released a new base mortality table, Pri-2012, that will generally replace the RP-2006 base mortality rates in use since 2014.
Scale MP-2019 reflects historical U.S. population mortality experience through 2017. Based on the SOA's preliminary estimates, Scale MP-2019 may reduce a pension plan's current liabilities by .3% to 1.0%, depending on the characteristics of the plan. The issuance of the Scale MP-2019 will not affect the 2018 benefit obligations of plans that filed by the October 15, 2019, Form 5500 filing deadline. However, sponsors of employee benefit plans with balance sheet dates before October 24, 2019, whose financial statements were not available to be issued before that date will need to refer to the guidance in AICPA Technical Questions and Answers (TIS) 3700.01, Pension Obligations, Effect of New Mortality Tables on Nongovernmental Employee Benefit Plans (EBPs) and Nongovernmental Entities That Sponsor EBPs. The guidance states that the release of new information is viewed for accounting purposes as a recognized subsequent event. Therefore, for financial statements of plan sponsors and employee benefit plans with balance sheet dates before October 24, 2019, that are not currently available to be issued, entities should evaluate the effect of this new information to those financial statements.
Entities should consider the SOA's new data for U.S.-based defined benefit pension and other postretirement benefit plans when making their mortality assumptions for year-end 2019 financial reporting. Plan auditors may wish to inform their plan clients that the updated mortality improvement scale has been released. Click here to access the SOA's Scale MP-2019.
Changes to 401(k) Hardship distribution requirements
The IRS amended the rules for hardship distributions from 401(k) plans. The final regulations modify the existing safe harbor list of expenses for which distributions are deemed to be made on account of an immediate and heavy financial need. They also eliminate the requirements that plan participants take loans from the plan to the extent they are available before they are permitted to take a hardship distribution from the plan, and that participants may not make new contributions to the plan within six months of the hardship distribution. The changes to the hardship distribution rules apply to plan years beginning after December 31, 2018. Auditors should be aware of these changes as they consider controls surrounding hardship withdrawals and substantive audit procedures related to benefit payments, claims, and distributions.
Click here to read the new IRS hardship distribution rules.
DOL Proposed Safe Harbor for Use of Electronic Media
The DOL has proposed a new, additional safe harbor for the use of electronic media to furnish information to participants and beneficiaries of ERISA plans. The proposal would allow plan administrators who meet certain conditions to provide participants and beneficiaries with a notice that certain disclosures will be made available on a website. Individuals who prefer to receive these disclosures on paper will be able to request paper copies and to opt out of electronic delivery entirely.
It is intended to improve the effectiveness of the disclosures and significantly reduce the costs and burden associated with furnishing many of the recurring and most costly ERISA disclosures. The proposal also contains a request for information that explores whether and how any additional changes to ERISA's general disclosure framework, focusing on design, delivery, and content, may be made to further improve the effectiveness of ERISA disclosures.
Click here to view the DOL proposal on use of electronic disclosures to participants.
Special Member Benefit—December 9-10 Virtual EBP Accounting, Auditing and Regulatory Update Conference
Conference, to be held December 9-10, will be a virtual only event this year. This virtual conference qualifies for up to 8 hours of CPE. This conference is specifically designed over 2 half-days (12:30-4:40 p.m. Eastern Time (ET)), to allow both east and west coast participants to interact and chat live during sessions with the speakers and other fellow virtual attendees.
EBPAQC members qualify for a special $50 discount to the December 9-10, 2019 AICPA Employee Benefit Plans Accounting, Auditing and Regulatory Update Conference. Be sure to enter the coupon code "EBPAQC."
Click here to register for virtual attendance at the December 9-10 EBP Accounting, Auditing & Regulatory Update Conference.
Sincerely,
AICPA Employee Benefit Plans Audit Quality Center |
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