Dear Center Members: |
This alert contains information regarding:
- Mandatory EBPAQC annual membership requirements compliance questionnaire
- Changes to the DOL's independence rules
- AICPA and EBPAQC auditor independence resources
- Member benefit – December 8-9 EBP Accounting, Auditing and Regulatory Update Online
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Mandatory EBPAQC Membership Requirements Compliance Assessment Questionnaire
The annual mandatory EBPAQC Membership Requirements Compliance Assessment Questionnaire was emailed to EBPAQC firms on November 1. If you have already completed the questionnaire, thank you for your timely response. If you have not yet completed the questionnaire, we ask that you please complete it by December 9. If you did not receive the compliance questionnaire or have questions about completing the questionnaire, please email the Center at ebpaqc@aicpa.org.
DOL Releases Final Rule on Auditor Independence
The Department of Labor has released a final rule, Interpretive Bulletin Relating to the Independence of Employee Benefit Plan Accountants (IB), that establishes guidelines for determining when a qualified public accountant is independent for purposes of auditing the financial statements required to be included in the annual report filed with the DOL under ERISA. It revises and restates the previous IB on auditor independence the DOL issued in 1975.
Time Period During Which Accountants Are Prohibited From Holding Financial Interests in the Plan or Plan Sponsor. The IB provides an exception for certain new audit engagements from the otherwise applicable condition on holding disqualifying financial interests during the period covered by the financial statements being audited. Under the new rule, an accountant or firm is not disqualified from accepting a new audit engagement merely because of holding publicly traded securities of a plan sponsor during the period covered by the financial statements as long as the accountant, accounting firm, partners, shareholder employees, and professional employees of the accountant's accounting firm, and their immediate family, have disposed of any holdings of such publicly traded securities prior to the period of professional engagement. For purposes of the exception, publicly traded securities are securities listed on a registered stock exchange in which quotations are published on a daily basis, securities regularly traded in a national or regional over-the-counter market for which published quotations are available, or securities traded on a foreign national securities exchange that is officially recognized, sanctioned, or supervised by a governmental authority and where the security is deemed by the SEC as having a ready market under applicable SEC rules.
The updated IB also includes a definition of the "period of professional engagement" to mean the period beginning when an accountant either signs an initial engagement letter or other agreement to perform the audit or begins to perform any audit, review or attest procedures (including planning the audit of the plan's financial statements), whichever is earlier, and ending with the formal notification, either by the member or client, of the termination of the professional relationship or the issuance of the audit report for which the accountant was engaged, whichever is later. This exception provides accountants with a divestiture window between the time when there is an oral agreement or understanding that a new client has selected them to perform the plan audit and the time an initial engagement letter or other written agreement is signed or audit procedures commence, whichever is sooner.
The new audit engagement exception is limited to publicly traded securities. It is important to note that the updated IB continues to provide that other financial interests in the plan sponsor during the period covered by the financial statements categorically impair the accountant's independence even if divested before commencing a new audit engagement.
Definition of "Office" for Purpose of Determining Who Is a "Member" of the Firm. The 1975 IB defines "member" as "all partners or shareholder employees in the firm and all professional employees participating in the audit or located in an office of the firm participating in a significant portion of the audit." Given the nature of recent changes to the concept of an "office," the DOL now provides a definition of office for purposes of determining when an individual is "located in an office" of the firm participating in a significant portion of the audit. The updated IB defines the term "office" to mean a reasonably distinct subgroup within a firm, whether constituted by formal organization or informal practice, in which personnel who make up the subgroup generally serve the same group of clients or work on the same categories of matters regardless of the physical location of the individual.
Click here to read the DOL independence IB.
EBPAQC and AICPA auditor independence resources
The EBPAQC has the following resources to assist members in better understanding the independence rules that apply to EBP auditors and their firms:
The EBPAQC tool, Non-attest services performed for EBP audit client independence review tool, helps auditors document their assessment of whether non-attest services performed for an EBP audit client impairs independence.
Click here to access the non-attest services independence review tool.
The AICPA's Frequently Asked Questions: Application of the independence rules to affiliates of employee benefit plans, helps members better understand how the definitions and guidance provided in the Client Affiliates interpretation apply to affiliates of employee benefit plans subject to ERISA through the use of answers to frequently asked questions (FAQ).
Click here to access the affiliates FAQs.
The AICPA's independence rules are codified in AICPA Rule 101, Independence.
Click here to view the AICPA’s independence rules.
AICPA Ethics staff also is working to update the DOL AICPA independence rule comparison tool to assist members in understanding some of the more common DOL and AICPA independence rules and the differences between them. The EBPAQC will notify members when the tool is completed.
December 8-9 AICPA EBP Accounting, Auditing and Regulatory Update Online Conference – Special Member Benefit
The AICPA Employee Benefit Plans Accounting, Auditing and Regulatory Update (AARU) Online Conference will be held virtually on December 8-9, 2022. This conference offers up to 10 hours of CPE credit. It is specifically designed over 2 half-days (approximately 11:30 a.m. - 5:00 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.
The online conference will include sessions on economic, financial, and technological shifts shaping the decade ahead; pooled employer plans (PEPs); employee benefit plan risk management best practices; electronic audit evidence; corrections; record keeping; the future of auditing; and accounting and financial reporting complexities related to investments in crypto assets; an audit & accounting update; a Department of Labor (DOL) update; and a regulatory update. The conference will wrap-up with the popular "Ask the Experts" session.
EBPAQC members qualify for a $50 discount. Be sure to enter the coupon code "EBPAQC."
Click here to register the December 8-9 AICPE Employee Benefit Plans Accounting, Auditing and Regulatory Update (AARU) Update Online Conference.
Sincerely,
AICPA Employee Benefit Plans Audit Quality Center |
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