Firm Preparedness Checklist



Updated as of January 2021Firm preparedness checklist for ERISA employee benefit plan auditsThis checklist was developed by the AICPA Employee Benefit Plan Audit Quality Center (EBPAQC) as a non-authoritative practice aid to assist member firm Designated Audit Quality Partners (DAQPs) assess their firm’s preparedness for the ERISA employee benefit plan (EBP) audit season and to enhance the quality of their firm’s ERISA EBP audit practice.This checklist addresses general firm preparedness issues for ERISA audits including:the firm’s quality control (QC) policies and procedures related to the ERISA audit practice,firm-wide inventory of ERISA EBP audits, client acceptance review and auditor independence,reporting requirements and audit filing deadlines,staffing and scheduling,staff training,audit resources and tools,SOC1? reports,consideration of common audit deficiencies, andperforming self-inspections of ERISA EBP audits.The EBPAQC tool, Performing Quality ERISA Employee Benefit Plan Audits: Firm Best Practices, assists auditors in identifying and implementing best practices for their firm’s ERISA EBP audit practice, including establishing effective quality control policies and procedures, implementation tips, and links to useful tools and resources.Preparedness considerationsYesNoComment or referenceDocument and communicate the firm’s quality control (QC) policies and procedures related to the ERISA EBP audit practiceEBPAQC firms are required to establish policies and procedures specific to the firm’s ERISA EBP audit practice to comply with the applicable professional standards and Center membership requirements (also see the related questions & answers on the membership requirements).Have the firm’s QC policies and procedures specific to the firm’s ERISA EBP audit practice been established, updated and documented? This may be done by the following methods:revise the firm’s QC document, prepare an addendum to the firm’s QC document,revise the firm’s accounting and auditing manual,revise the firm’s policies and procedures manual, orother documentation method.Have the firm’s QC policies and procedures specific to the ERISA EBP audit practice been appropriately communicated to staff? This may be done by the following methods:circulate the firm’s QC document, addendum to the firm’s QC document, accounting and auditing manual, policies and procedures manual, or other documentation containing the QC policies and procedures.establish training to inform audit staff of the firm’s QC policies and proceduresother communications to inform audit staff of the firm’s QC policies and procedures.The EBPAQC resources, Performing Quality ERISA Employee Benefit Plan Audits: Firm Best Practices assists auditors in identifying and implementing best practices for their firm’s ERISA employee benefit plan (EBP) audit practice, including establishing effective quality control policies and procedures, implementation tips, and links to useful tools and resources.?Firm-wide inventory of ERISA EBP audits To properly prepare for and manage ERISA EBP audits it is helpful to conduct a firm-wide inventory of plan clients by identifying the number and types of audits the firm will perform.Have the firm’s ERISA EBP audits been identified according to plan structure (e.g., single-employer; multi-employer; multiple-employer)?Have the firm’s ERISA EBP audits been identified according to plan type? (e.g., pension, health and welfare, defined benefit, defined contribution (401(k), 403(b), ESOP, Form 11-K filers)?Have the firm’s ERISA EBP audits been identified as to the type of audit (full vs. limited scope audit if the firm has not adopted SAS No. 136; non-section 103(a)(3)(C) or ERISA Section 103(a)(3)(C) if the firm has adopted SAS No. 136)? The EBPAQC tool ERISA Audit Inventory and Staffing Schedule assists members in conducting a firm-wide inventory, as described above.Client acceptance review and auditor independenceIt is important to perform an annual client acceptance review of new and existing plan clients.For new engagementsHas a client acceptance form been completed?Have the risks associated with the acceptance of the new engagement been evaluated?For continuing engagementsHave changes at the client that affect risk been evaluated?Have engagements been classified according to risk?Have all prior year audit reporting/opinion issues been considered for each engagement? (e.g., qualified or adverse opinions; going concern opinion, etc.)Regarding independence issues:1. Have non-audit services provided by the firm to plan clients been evaluated for compliance with AICPA ethics and DOL independence requirements?2. Have all other independence issues been considered, including family and financial relationships?The EBPAQC Auditor Independence Resource Center includes tools to assist firms evaluate independence, including:DOL and AICPA Independence Rule Comparison, Documentation of Review of AICPA Independence Requirements Where Nonattest Services Are Performed for an Employee Benefit Plan Audit Client, and Frequently Asked Questions:? Application of the Independence Rules to Affiliates of Employee Benefit Plans.Reporting requirements and audit filing deadlinesHas firm-wide oversight responsibility been established for meeting all firm EBP audit filing and reporting requirements and deadlines?Have ERISA audit reporting and filing requirements and deadlines been identified and communicated to appropriate staff?Has the firm obtained a current financial statement reporting and disclosure checklist?Have common financial reporting disclosure issues been identified? [AICPA Employee Benefit Plans—Best Practices in Presentation and Disclosure contains illustrative disclosures for financial statements of employee benefit plans]Staffing and schedulingHas the appropriately level of staff (partner, manager, supervisor, in-charge) with sufficient experience and training been assigned to all ERISA EBP audits?The EBPAQC tool ERISA Audit Inventory and Staffing Schedule assists members in staffing and scheduling ERISA audit engagements, as described above.The AICPA Competency Framework: Employee Benefit Plan Auditing?(the Framework) is designed to help CPAs understand the knowledge and skills necessary to perform high-quality EBP audits.?Staff training Has the firm established a program to ensure that all ERISA employee benefit plan audit engagement personnel possess current knowledge, appropriate to their level of involvement in the engagement, of applicable professional standards, rules and regulations for ERISA employee benefit plan audits.Have all EBP audit staff received ERISA audit training appropriate to their level of involvement in EBP audits (e.g., new hire, supervisory, partner)?Are training evaluations obtained and reviewed for possible improvements to training opportunities?Audit resources and tools Does the firm have the most recent version of ERISA EBP audit resources and tools?AICPA Audit and Accounting Guide, Employee Benefit Plans August 1, 2020 version for firms adopting SAS No. 136 for 2020 plan year auditsJanuary 1, 2019 version for firms not adopting SAS No. 136 for 202 plan year audits AICPA Employee Benefit Plans—Best Practices in Presentation and DisclosureCurrent AICPA Statements on Auditing StandardsStatements on Financial Accounting Standards; FASB Interpretations, Technical Bulletins, Concepts Statements, FASB Staff Positions; EITF ConsensusAICPA Technical Questions and AnswersAudit programs for planning, fraud assessment and other audit program practice checklistsSOC 1? reportsHave all service providers for each plan been identified, including the need to obtain a SOC 1? report?Has the type of SOC 1 report (i.e.- Type I or Type II) needed for each plan been identified?Has it been determined whether each SOC 1? report will cover the applicable objectives?The EBPAQC tool Documentation of Use of a Type 2 Service Auditor’s Report in an Audit of an Employee Benefit Plan’s Financial Statements assists members in documenting procedures and findings related to controls at a service organization that are likely to be relevant to the employee benefit plan’s internal control over financial reporting.Consideration of common audit deficienciesIn planning each engagement and preparing audit programs, have common ERISA audit deficiencies and results of recent peer reviews and internal inspections been considered? EBPAQC resources:EBPAQC Common EBP Audit Deficiencies Planning Tool: Summary of Common EBP Audit Deficiencies, Audit Guidance and Resources]Firm self-inspectionsEBPAQC firms are required to establish annual internal inspection procedures that include a review of the firm’s ERISA employee benefit plan audit practice-refer to the Center membership requirements and related questions and answers on annual internal inspection procedures.See the EBPAQC tool, Annual Internal Inspections: A Key to EBP Audit Quality.A. With respect to self-inspections, have the following issues been considered:Scope of the inspections be representative of the firm’s ERISA employee benefit plan practice [i.e.- considering the number and different types of plan audits (e.g.- defined benefit, defined contribution, health and welfare, multiemployer, ESOPs, type of audit) and the various locations at which those audits are performed]Timing of inspectionsPlanning and approach, including multiple office considerationsQualifications of the individuals performing the self- inspectionsB. Does the firm have a current checklist to perform self-inspections? The AICPA Peer Review checklist, AICPA Employee Benefit Plan Audit Engagement Checklist (PRP Section 20,700), (revised as of October 2020) is helpful in performing self-inspections. 2078355251587000 ................
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