An Employee Stock Ownership Plan (ESOP) is an IRC section 401(a) qualified defined contribution plan which allows employees to own stock in the company for which they work. ESOPs may be sponsored by public companies or closely held corporations. They invest primarily in the securities of the sponsoring employer; may be used as a corporate financing technique; and may be leveraged or non-leveraged. ESOPs are subject to the annual reporting and audit requirements of ERISA.
Documenting the evaluation of an appraisal used in an ESOP audit
This tool is designed to assist auditors in documenting their evaluation of whether an appraisal of employer stock prepared for plan management may be used as audit evidence in a financial statement audit of an employee stock ownership plan (ESOP) sponsored by a privately held company, including their assessment of whether it is necessary to use an auditor’s specialist.
Primer on Employee Stock Ownership Plans
This primer provides a general understanding of employee stock ownership plans (ESOPs), and includes topics on ESOP attributes and types of ESOPs, operations and recordkeeping, leveraged ESOPs, tax benefits and related compliance requirements, prohibited transactions exemptions, valuation of employer securities and accounting and auditing resources.
AICPA Publications - General
Chapter 5 – Defined Contribution Retirement Plans, Appendix D – ESOP Illustrative Financial Statements
AU-C section 540, Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures.
AU-C section 620, Using the Work of an Auditor's Specialist
AU-C section 9620, Using the Work of an Auditor's Specialist: Auditing Interpretations of Section 620.
This Practice Aid contains extensive guidance relating to a key area of stock-based compensation. It identifies best practices for valuation of and disclosures related to privately-held-company equity securities issued as compensation.
This statement establishes standards for AICPA members engaged to or, as part of another engagement, estimate the value of a business, business ownership interest, security, or intangible asset.
Employee Benefit Plans: Employee Stock Ownership Plans (ESOPs) (1 hour auditing), Purchase/Sale of Closely-Held Business: Specialty Transaction: Employee Stock Ownership Plan & Trust (2 hour tax)
The DOL EBSA has an ESOP enforcement project designed to identify and correct violations of ERISA in connection with ESOPs.
This DOL FAB discusses the obligations of a fiduciary under sections 404(a) and 408(b)(3) of ERISA in connection with the refinancing of an exempt ESOP loan.
Employee Stock Ownership Plans (ESOPs) contains applications for ESOPs and IRS responses to technical assistance.
Describes the general ESOP requirements, how an ESOP operates, prohibited transaction exemption, tax credit ESOPs , IRS examination steps, and more general information.
S Corporation ESOP Guidance discusses abusive transactions involving ESOPs and IRC Section 409(p) relating to ownership structures involving S Corporations and ESOPs that concentrate the benefits of the ESOP in a small number of people.
Provides guidance regarding when employer securities are tradable on an established securities market or on an established market for purposes of certain provisions of the Internal Revenue Code.
The ESOP Association website includes publications and products, including an administrative handbook with a glossary of ESOP terminology, briefs and publications on valuation and financing issues.
The NCEO website includes articles and research on ESOPs, including a bi-monthly column on current news and legislative updates, and publications, including topics such as ESOP valuations, S Corporations, various handbooks and regulatory rulings.
Employee Benefit Plan Audit Quality Center
The Center is a voluntary membership organization for firms that perform or are interested in performing ERISA employee benefit plan audits.
