Employee Benefit Plans 2018 E-Book

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: AICPA Audit and Accounting Guide
• Sprache: Englisch

Seitenzahl: 1742

Veröffentlichungsjahr: 2018

Beschreibung

Considered the industry standard resource, this guide provides practical guidance, essential information and hands-on advice on the many aspects of accounting and authoritative auditing for employee benefit plans. This new edition has been updated to include additional information related to the issuance of the going concern standard, revisions to provide further guidance related to limited-scope audits, a new illustrative auditor's report for 11-K audits, and has been revised for the recodification of the attestation standards. Updates include: * Q&A section 2220.27, "Determining When the Practical Expedient is Not Used or Not Available" * Q&A section 2220.28, "Definition of Readily Determinable Fair Value and Its Interaction with the NAV Practical Expedient" * SAS No. 132, The Auditor's Consideration of an Entity's Ability to Continue as a Going Concern * PCAOB Release No. 2015-008, âEURoeImproving the Transparency of AuditsâEUR? * AS 3101, The Auditor's Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion * SSAE No. 18, Attestation Standards: Clarification and Recodification

Leseprobe

Preface

(Updated as of January 1, 2018)

This guide was prepared by the Employee Benefit Plans Committee.

About AICPA Audit and Accounting Guides

This AICPA Audit and Accounting Guide has been developed by the AICPA Employee Benefit Plans Expert Panel and the Guide Overhaul Task Force to assist practitioners in performing and reporting on their audit engagements and to assist management of employee benefit plans in the preparation of their financial statements in conformity with U.S. generally accepted accounting principles (GAAP).

AICPA Guides may include certain content presented as “Supplement,” “Appendix,” or “Exhibit.” A supplement is a reproduction, in whole or in part, of authoritative guidance originally issued by a standard setting body (including regulatory bodies) and applicable to entities or engagements within the purview of that standard setter, independent of the authoritative status of the applicable AICPA Guide. Both appendixes and exhibits are included for informational purposes and have no authoritative status.

Accounting Content

The Financial Reporting Executive Committee (FinREC) is the designated senior committee of the AICPA authorized to speak for the AICPA in the areas of financial accounting and reporting. Conforming changes made to the financial accounting and reporting guidance contained in this guide are approved by the FinREC Chair (or his or her designee). Updates made to the financial accounting and reporting guidance in this guide exceeding that of conforming changes are approved by the affirmative vote of at least two-thirds of the members of FinREC.

This guide does the following:

•     Identifies certain requirements set forth in FASB Accounting Standards Codification® (ASC).

•     Describes FinREC’s understanding of prevalent or sole industry practice concerning certain issues. In addition, this guide may indicate that FinREC expresses a preference for the prevalent or sole industry practice, or it may indicate that FinREC expresses a preference for another practice that is not the prevalent or sole industry practice; alternatively, FinREC may express no view on the matter.

•     Identifies certain other, but not necessarily all, industry practices concerning certain accounting issues without expressing FinREC’s views on them.

•     Provides guidance that has been supported by FinREC on the accounting, reporting, or disclosure treatment of transactions or events that are not set forth in FASB ASC.

Accounting guidance for nongovernmental entities included in an AICPA Guide is a source of nonauthoritative accounting guidance. As discussed later in this preface, FASB ASC is the authoritative source of U.S. accounting and reporting standards for nongovernmental entities, in addition to guidance issued by the SEC. The accounting provisions of this guide are not intended to apply to employee benefit plans of governmental entities. AICPA members should be prepared to justify departures from GAAP, as discussed in “Accounting Principles Rule” (ET sec. 1.320.001).1

Auditing Content

An AICPA guide containing auditing guidance related to generally accepted auditing standards (GAAS) is recognized as an interpretive publication as defined in AU-C section 200, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance With Generally Accepted Auditing Standards.2 Interpretive publications are recommendations on the application of GAAS in specific circumstances, including engagements for entities in specialized industries.

Interpretive publications are issued under the authority of the AICPA Auditing Standards Board (ASB) after all ASB members have been provided an opportunity to consider and comment on whether the proposed interpretive publication is consistent with GAAS. The members of the ASB have found the auditing guidance in this guide to be consistent with existing GAAS.

Although interpretive publications are not auditing standards, AU-C section 200 requires the auditor to consider applicable interpretive publications in planning and performing the audit because interpretive publications are relevant to the proper application of GAAS in specific circumstances. If the auditor does not apply the auditing guidance in an applicable interpretive publication, the auditor should document how the requirements of GAAS were complied with in the circumstances addressed by such auditing guidance.

The ASB is the designated senior committee of the AICPA authorized to speak for the AICPA on all matters related to auditing. Conforming changes made to the auditing guidance contained in this guide are approved by the ASB Chair (or his or her designee) and the Director of the AICPA Audit and Attest Standards Staff. Updates made to the auditing guidance in this guide exceeding that of conforming changes are issued after all ASB members have been provided an opportunity to consider and comment on whether the guide is consistent with the Statements on Auditing Standards (SASs).

Any auditing guidance in a guide appendix or exhibit (whether a chapter or back matter appendix or exhibit), though not authoritative, is considered an “other auditing publication.” In applying such guidance, the auditor should, exercising professional judgment, assess the relevance and appropriateness of such guidance to the circumstances of the audit. Although the auditor determines the relevance of other auditing guidance, auditing guidance in a guide appendix or exhibit has been reviewed by the AICPA Audit and Attest Standards staff and the auditor may presume that it is appropriate.

Purpose and Applicability

This guide applies to the financial statements of employee benefit plans, including defined contribution retirement plans, defined benefit pension plans, and health and welfare benefit plans, that are subject to the financial reporting requirements of the Employee Retirement Income Security Act of 1974 (ERISA), as well as those that are not. See chapter 1, "Introduction and Background," for further information. Appendix A, "ERISA and Related Regulations," identifies and summarizes relevant ERISA requirements and regulations.

This guide does not discuss the application of all GAAP and all GAAS that are relevant to the preparation and audit of financial statements of employee benefit plans. This guide is directed primarily to those aspects of the preparation and audit of financial statements that are unique to employee benefit plans or are considered particularly significant to them.

The guide contains example auditing procedures. Detailed internal control questionnaires and audit programs are not included. The nature, timing, and extent of auditing procedures are a matter of professional judgment and will vary depending on the size, organizational structure, risk assessment, internal control, and other factors in a specific engagement.

The guide also includes information regarding statutory rules and regulations applicable to employee benefit plans and illustrations of plan financial statements and auditors' reports. The Department of Labor Employee Benefits Security Administration strongly encourages the use of this guide in meeting the requirements contained in ERISA Section 103 that a plan have an audit conducted in accordance with GAAS.

The guidance in this Audit and Accounting Guide is in certain respects more detailed than that generally included in other AICPA Audit and Accounting Guides. To facilitate reference, paragraphs have been numbered.

Recognition

2018 Guide Edition

AICPA Senior Committees

Auditing Standards Board

Financial Reporting Executive Committee

Ilene Kassman,

ASB Member

Daniel Noll,

Senior Director AICPA Accounting Standards and FinREC Staff Liaison

Michael J. Santay,

Chair

James Dolinar,

Chair

The AICPA gratefully acknowledges those members of the AICPA Employee Benefit Plans Expert Panel who reviewed or otherwise contributed to the development of this edition of the guide: Josie Hammond (Task Force Chair), Beth Thompson (Expert Panel Chair), Darlene Bayardo, Mark Blackburn, Eileen Brassil, Sandi Carrier, Judith Goldberg, Chip Harris, Stacy Meyer, Bertha Minnihan, Kriste Naples-DeAngelo, Kimber Smail-Benedict, David Torrillo, and Michele Weldon, and the Office of the Chief Accountant, Employee Benefits Security Administration, U.S. Department of Labor.

The AICPA staff would also like to acknowledge the invaluable assistance of JulieAnn Verrekia provided in updating and maintaining the guidance in this guide.

2017 Guide Edition

(Updates to this edition exceeded that of conforming changes.)

AICPA Senior Committees

Auditing Standards Board

Financial Reporting Executive Committee

Ilene Kassman,

ASB Member

Daniel Noll,

FinREC Staff Liaison

Michael J. Santay,

Chair

James Dolinar,

Chair

Gerry Boaz

Michelle Avery

Jay Brodish, Jr.

Muneera Carr

Dora Burzenski

Cathy Clarke

Joseph Cascio

Mark Crowley

Lawrence Gill

Rick Day

Steve Glover

Richard Dietrich

Gaylen Hansen

William Fellows

Tracy Harding

Josh Forgione

Daniel Hevia

Gautam Goswami

Alan Long

Robert Owens

Rich Miller

Jay Seliber

Dan Montgomery

Jeff Sisk

Steven Morrison

Brian Stevens

Rick Reisig

Angela Storm

Catherine Schweigel

Jeremy Whitaker

Jere G. Shawver

M. Chad Singletary

The AICPA gratefully acknowledges those members of the AICPA Employee Benefit Plans Expert Panel who reviewed or otherwise contributed to the development of this edition of the guide: Josephine Hammond (Task Force Chair), Beth Thompson (Expert Panel Chair), Darlene Bayardo, Mark Blackburn, Eileen Brassil, Sandi Carrier, Judith Goldberg, Chip Harris, Stacy Meyer, Bertha Minnihan, Kriste Naples-DeAngelo, Kimber Smail, David Torrillo, and Michele Weldon.

The AICPA gratefully acknowledges those members of the AICPA Enhancive Updates Task Force who reviewed or otherwise contributed to the development of the enhancive updates for this edition: Sandi Carrier, Sarah DeVries, Judith Goldberg, and Josie Hammond.

2016 Guide Edition

(Updates to this edition exceeded that of conforming changes.)

AICPA Senior Committees

Auditing Standards Board

Financial Reporting Executive Committee

Ilene Kassman,

ASB Member

Daniel Noll,

FinREC Staff Liaison

Michael J. Santay,

Chair

James Dolinar,

Chair

Gerry Boaz

Aaron Anderson

Dora Burzenski

Muneera Carr

Elizabeth S. Gantnier

Mark Crowley

Steve Glover

Rick Day

Daniel Hevia

Richard Dietrich

Sandra K. Johnigan

Josh Forgione

Ryan Kaye

Gautam Goswami

Marcia Marien

Walter Ielusic

Rich Miller

Matt Kelpy

Dan Montgomery

Steve Moehrle

Steven Morrison

Danita Ostling

Marc Panucci

Robert Owens

Joshua W. Partlow

Bernard Pump

Rick Reisig

Phil Santarelli

Catherine Schweigel

Jay Seliber

Jere G. Shawver

Jeff Sisk

M. Chad Singletary

Brian Stevens

Angela Storm

Mike Tamulis

Jeremy Whitaker

The AICPA gratefully acknowledges those members of the AICPA Employee Benefit Plans Expert Panel who reviewed or otherwise contributed to the development of this edition of the guide: Josephine Hammond (Task Force Chair), Judith Goldberg (Expert Panel Chair), Doug Bertossi, Mark Blackburn, Sandi Carrier, Sarah DeVries, Monique Elliott, Alice Evans, Marilee Lau, David Leising, Bertha Minnihan, Kimber Smail, Deborah Smith, Wendy Terry, Beth Thompson, and Michele Weldon.

The AICPA gratefully acknowledges those members of the AICPA Employee Stock Ownership Plans Task Force who reviewed or otherwise contributed to the development of the new Employee Stock Ownership Plans chapter: Marilee Lau (Task Force Chair), Cindy Dwyer, Josephine Hammond, Sheryl Hessler, Hal Hunt, David Leising, Rebecca Miller, Mark Ritter, Patricia Schmitt, and Deborah Smith. In addition, special thanks to Marilee Lau and Rebecca Miller for their significant additional efforts towards the development of this chapter beyond their roles as task force participants.

AICPA Staff

Linda Delahanty

Senior Manager

Audit and Attest Standards, and

Staff Liaison

to the Employee Benefit Plans Expert Panel and Guide Overhaul Task Force

Diana Krupica

Lead Manager—Public Accounting

Product Management and Development

Guidance Considered in This Edition

This edition of the guide has been modified by the AICPA staff to include certain changes necessary due to the issuance of authoritative guidance since the guide was originally issued, and other revisions as deemed appropriate. Relevant guidance issued through January 1, 2018, has been considered in the development of this edition of the guide. However, this guide does not include all audit, accounting, reporting, and other requirements applicable to an entity or a particular engagement. This guide is intended to be used in conjunction with all applicable sources of relevant guidance.

Relevant guidance that is issued and effective on or before January 1, 2018, is incorporated directly in the text of this guide. Relevant guidance issued but not yet effective as of January 1, 2018, is referenced in a “guidance update” box; that is, a box that contains summary information on the guidance issued but not yet effective.

In updating this guide, all guidance issued up to and including the following was considered, but not necessarily incorporated, as determined based on applicability:

•     FASB Accounting Standards Update (ASU) No. 2017-15, Codification Improvements to Topic 995, U.S. Steamship Entities: Elimination of Topic 995

•     SAS No. 133, Auditor Involvement with Exempt Offering Documents (AU-C sec. 945)

•     Interpretation No. 4, “Performing and Reporting on an Attestation Engagement Under Two Sets of Attestation Standards” (AT-C sec. 9105 par. .31–.35)3

•     Statement on Standards for Attestation Engagements No. 18, Attestation Standards: Clarification and Recodification (AT-C sections)

•     Statement on Standards for Accounting and Review Services No. 23, Omnibus Statement on Standards for Accounting and Review Services—2016 (AR-C sections)4

•     Statement on Quality Control Standard No. 8, A Firm’s System of Quality Control (Redrafted) (QC sec. 10)5

•     PCAOB Auditing Standard (AS) No. 3101, The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion6

•     PCAOB Staff Guidance, Changes to the Auditor’s Report Effective for Audits of Fiscal Years Ending on or After December 15, 2017 (sec. 300.04)

Users of this guide should consider guidance issued subsequent to those items listed previously to determine their effect, if any, on entities and engagements covered by this guide. In determining the applicability of recently issued guidance, its effective date should also be considered.

The changes made to this edition of the guide are identified in appendix H, “Schedule of Changes Made to the Text From the Previous Edition.” The changes do not include all those that might be considered necessary if the guide were subjected to a comprehensive review and revision.

PCAOB quoted content is from PCAOB Auditing Standards and PCAOB Staff Audit Practice Alerts, ©2015, Public Company Accounting Oversight Board. All rights reserved. Used by permission.

FASB standards quoted are from FASB Accounting Standards Codification ©2015, Financial Accounting Foundation. All rights reserved. Used by permission.

FASB ASC Pending Content

Presentation of Pending Content in FASB ASC

Amendments to FASB ASC (issued in the form of ASUs) are initially incorporated into FASB ASC in “pending content” boxes below the paragraphs being amended with links to the transition information. The pending content boxes are meant to provide users with information about how the guidance in a paragraph will change as a result of the new guidance.

Pending content applies to different entities at different times due to varying fiscal year-ends, and because certain guidance may be effective on different dates for public and nonpublic entities. As such, FASB maintains amended guidance in pending content boxes within FASB ASC until the “roll-off” date. Generally, the “roll-off” date is six months following the latest fiscal year end for which the original guidance being amended could still be applied.

Presentation of FASB ASC Pending Content in AICPA Guides

Amended FASB ASC guidance that is included in pending content boxes in FASB ASC on January 1, 2018, is referenced as “Pending Content” in this guide. Readers should be aware that “Pending Content” referenced in this guide will eventually be subjected to FASB’s “roll-off” process and no longer be labeled as “Pending Content” in FASB ASC (as discussed in the previous paragraph).

Terms Used to Define Professional Requirements in This AICPA Audit and Accounting Guide

Any requirements described in this guide are normally referenced to the applicable standards or regulations from which they are derived. Generally, the terms used in this guide describing the professional requirements of the referenced standard setter (for example, the ASB) are the same as those used in the applicable standards or regulations (for example, “must” or “should”). However, where the accounting requirements are derived from FASB ASC, this guide uses “should,” whereas FASB uses “shall.” In its resource document “About the Codification” that accompanies FASB ASC, FASB states that it considers the terms should and shall to be comparable terms and to represent the same concept—the requirement to apply a standard.

Readers should refer to the applicable standards and regulations for more information on the requirements imposed by the use of the various terms used to define professional requirements in the context of the standards and regulations in which they appear.

Certain exceptions apply to these general rules, particularly in those circumstances where the guide describes prevailing and/or preferred industry practices for the application of a standard or regulation. In these circumstances, the applicable senior committee responsible for reviewing the guide’s content believes the guidance contained herein is appropriate for the circumstances.

Applicability of GAAS and PCAOB

Appendix A, “Council Resolution Designating Bodies to Promulgate Technical Standards,” of the AICPA Code of Professional Conduct recognizes both the ASB and the PCAOB as standard setting bodies designated to promulgate auditing, attestation, and quality control standards. Paragraph .01 of the “Compliance With Standards Rule” (ET sec. 1.310.001 and 2.310.001) requires an AICPA member who performs an audit to comply with the applicable standards.

Audits of the financial statements of those entities not subject to the oversight authority of the PCAOB (that is, those audit reports not within the PCAOB’s jurisdiction as defined by the Sarbanes-Oxley Act of 2002, as amended)—hereinafter referred to as nonissuers—are to be conducted in accordance with GAAS as issued by the ASB. The ASB develops and issues standards in the form of SASs through a due process that includes deliberation in meetings open to the public, public exposure of proposed SASs, and a formal vote. The SASs and their related interpretations are codified in AICPA Professional Standards. In citing GAAS and their related interpretations, references generally use section numbers within the codification of currently effective SASs and not the original statement number, as appropriate.

Audits of the financial statements of those entities subject to the oversight authority of the PCAOB (that is, those audit reports within the PCAOB’s jurisdiction as defined by the Sarbanes-Oxley Act of 2002, as amended)—hereinafter referred to as issuers—(for example, plans that are required to file a Form 11-K with the SEC) are to be conducted in accordance with standards established by the PCAOB, a private sector, nonprofit corporation created by the Sarbanes-Oxley Act of 2002. The SEC has oversight authority over the PCAOB, including the approval of its rules, standards, and budget. In citing the auditing standards of the PCAOB, references generally use section numbers within the reorganized PCAOB auditing standards and not the original standard number, as appropriate. See chapter 1 for further information regarding plans pursuant to SEC reporting requirements.

The auditing content in this guide primarily discusses GAAS issued by the ASB and is applicable to audits of nonissuers. Users of this guide may find the tool developed by the PCAOB’s Office of the Chief Auditor helpful in identifying comparable PCAOB standards. The tool is available at http://pcaobus.org/standards/auditing/pages/findanalogousstandards.aspx.

Considerations for audits of issuers in accordance with PCAOB standards may also be discussed within this guide’s chapter text. When such discussion is provided, the related paragraphs are designated with the following title: Considerations for Audits Performed in Accordance With PCAOB Standards. PCAOB guidance included in an AICPA guide has not been reviewed, approved, disapproved, or otherwise acted upon by the PCAOB and has no official or authoritative status.

AICPA.org Website

The AICPA encourages you to visit its website at www.aicpa.org and the Financial Reporting Center at www.aicpa.org/frc. The Financial Reporting Center supports members in the execution of high-quality financial reporting. Whether you are a financial statement preparer or a member in public practice, this center provides exclusive member-only resources for the entire financial reporting process, and provides timely and relevant news, guidance, and examples supporting the financial reporting process. Another important focus of the Financial Reporting Center is keeping those in public practice up to date on issues pertaining to preparation, compilation, review, audit, attestation, assurance, and advisory engagements. Certain content on the AICPA’s websites referenced in this guide may be restricted to AICPA members only.

Employee Benefit Plan Audit Quality Center

The Employee Benefit Plan Audit Quality Center (EBPAQC) is a firm-based, volunteer membership center of more than 2,600 firms with the goal of promoting quality employee benefit plan audits. The EBPAQC has developed tools and resources to help members recognize and avoid common employee benefit plan audit deficiencies identified by peer reviewers and the DOL. Common EBP Audit Deficiencies and Planning Tool: Summary of Common EBP Audit Deficiencies, Audit Guidance, and Resources (EBPAQC member only), summarize the most common deficiencies and provide links to audit guidance, and EBPAQC and AICPA tools.

In addition, the EBPAQC broadcasts exclusive member-only live forum webinars on relevant technical topics that are free to members or, for a nominal fee, members can receive CPE for watching the live webinars or rebroadcasts. The EBPAQC also provides timely EAlerts that include information about recent developments affecting employee benefit plan audits; a member-to-member discussion forum; practice management tools and aids intended to help members establish a quality employee benefit plan audit practice; and other audit engagement tools to help members perform quality ERISA audits.

Visit the center website at www.aicpa.org/ebpaqc to see a list of EBPAQC member firms and to preview EBPAQC benefits. For more information, contact the EBPAQC at [email protected].

Select Recent Developments

Revenue From Contracts With Customers

This edition of the guide has not been updated for FASB ASUs related to FASB ASC 606, Revenue from Contracts with Customers, and will be updated in a future edition. Readers are encouraged to consult the full text of these ASUs on FASB’s website at www.fasb.org.

FASB ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606)

FASB ASU No. 2014-09 provides a framework for revenue recognition and supersedes or amends several of the revenue recognition requirements in FASB ASC 605, Revenue Recognition, as well as guidance within the 900 series of industry-specific topics. The standard applies to any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance or lease contracts).

The AICPA has formed 16 industry task forces to assist in developing a new AICPA Accounting Guide on revenue recognition that will provide helpful hints and illustrative examples for how to apply the new standard. Revenue recognition implementation issues identified will be available for informal comment, after review by FinREC, at www.aicpa.org/revenuerecognition.

Readers are encouraged to submit comments to [email protected].

FASB ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date

In August 2015, FASB issued ASU No. 2015-14. The amendments in this ASU defer the effective date of ASU No. 2014-09 for all entities by one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU No. 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.

All other entities should apply the guidance in ASU No. 2014-09 to annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. All other entities may apply the guidance in ASU No. 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities also may apply the guidance in ASU No. 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, and interim reporting periods within annual reporting periods beginning one year after the annual reporting period in which the entity first applies the guidance in ASU No. 2014-09.

FASB ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing

In April 2016, FASB issued ASU No. 2016-10. The amendments in this ASU do not change the core principle of the guidance in FASB ASC 606. Rather, the amendments in this ASU clarify the following two aspects of FASB ASC 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas.

The amendments in this ASU affect the guidance in FASB ASU No. 2014-09, which is not yet effective. The effective date and transition requirements for the amendments in this ASU are the same as the effective date and transition requirements in FASB ASC 606 (and any other ASC amended by ASU No. 2014-09).

FASB ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients

In May 2016, FASB issued ASU No. 2016-12. The core principle of the guidance in FASB ASC 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in this ASU do not change the core principle of the guidance in FASB ASC 606. Rather, the amendments in this ASU affect only certain narrow aspects of FASB ASC 606 noted in this ASU.

The effective date and transition requirements for the amendments in this ASU are the same as the effective date and transition requirements for FASB ASC 606 (and any other FASB ASC topic amended by ASU No. 2014-09).

Disclosures for Investments in Certain Entities That Calculate Net Asset Value Per Share (Or Its Equivalent)

In May 2015, FASB issued ASU No. 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) (a consensus of the FASB Emerging Issues Task Force). This ASU removes the requirement to categorize within the fair value hierarchy investments for which fair values are estimated using the net asset value practical expedient provided by FASB ASC 820, Fair Value Measurement. Disclosures about investments in certain entities that calculate net asset value per share are limited under this ASU to those investments for which the entity has elected to estimate the fair value using the net asset value practical expedient. In addition, this ASU includes illustrative financial statements.

The amendments in ASU No. 2015-07 are effective for public business entities for fiscal years beginning after December 15, 2015, and for interim period within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2016, and for interim periods within those fiscal years. A reporting entity should apply the amendments retrospectively to all periods presented. Early application is permitted. Readers are encouraged to see the full ASU for additional information.

This guide has been updated for this ASU.

In November 2017, the AICPA revised Technical Questions and Answers (Q&A) section 2220.18, “Applicability of Practical Expedient,”7 to include the guidance from FASB ASC 820-10-15-4 and FASB ASC 820-10-35-61.

Also in November 2017, the AICPA issued Q&A section 2220.28, "Definition of Readily Determinable Fair Value and Its Interaction With the NAV Practical Expedient," which provides nonauthoritative guidance concerning the definition of readily determinable fair value (RDFV), as amended by FASB ASU No. 2015-10, Technical Corrections and Improvements, and its interaction with the net asset value (NAV) practical expedient. Q&A section 2220.28 discusses that if an investment has an RDFV, it cannot be measured using the NAV practical expedient and would be subject to the fair value measurement disclosures required by FASB ASC 820-10-50-2, including the requirement to categorize the investment within the fair value hierarchy. In contrast, an investment whose fair value is measured using the NAV practical expedient should not be categorized within the fair value hierarchy and would be subject to the disclosures required by FASB ASC 820-10-50-6A (the disclosure requirements in FASB ASC 820-10-50-2 do not apply to that investment).

FASB discussed questions raised in connection with condition (c) of the definition of RDFV and indicated the following:8

The Board could not identify a pervasive measurement issue on the basis of outreach conducted with stakeholders. While the Board acknowledged that the interpretation of the Master Glossary definition of readily determinable fair value could have implications on which set of disclosures may be used for certain investments (that is, fair value measurement disclosures or net asset value per share practical expedient disclosures), some Board members concluded that users of the financial statements would not be misled when provided either set of disclosures. Therefore, the Board would encourage entities to provide the disclosures that are consistent with the conclusions previously reached on the measurement of the investment.

Readers are encouraged to consult Q&A section 2220, Long-Term Investments, for the full text of these Q&As. The guide has been updated for these Q&As.

Financial Instruments

In January 2016, FASB issued ASU No. 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The global economic crisis further highlighted the need for improvement in the accounting models for financial instruments in today’s complex economic environment. The main objective in developing this ASU is enhancing the reporting model for financial instruments to provide users of financial statements with more decision-useful information.

The amendments in this ASU:

•     supersede the guidance to classify equity securities with readily determinable fair values into different categories (that is, trading or available-for-sale) and require equity securities (including other ownership interests, such as partnerships, unincorporated joint ventures, and limited liability companies) to be measured at fair value with changes in the fair value recognized through net income.

•     simplify the impairment assessment of equity investments without readily determinable fair values by requiring assessment for impairment qualitatively at each reporting period. That impairment assessment is similar to the qualitative assessment for long-lived assets, goodwill, and indefinite lived intangible assets.

•     exempt all entities that are not public business entities from disclosing fair value information for financial instruments measured at amortized cost.

•     require public business entities that are required to disclose fair value of financial instruments measured at amortized cost on the balance sheet to measure that fair value using the exit price notion consistent with FASB ASC 820.

•    require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option.

Prior to FASB ASU No. 2016-01, FASB ASC 825-10-50 generally required public entities or nonpublic entities with more than $100 million in assets to make certain disclosures related to the fair value of financial instruments not recorded at fair value on the statement of net assets available for benefits.

The required disclosures affected employee benefit plans that are required to file Form 11-K with the SEC, as well as plans with more than $100 million in assets. The disclosures typically related to the fair value of contributions receivable, accrued income, pending trades, and notes payable (for leveraged ESOPs).

One of the amendments in FASB ASU No. 2016-01 was the elimination of the fair value of financial instrument disclosure requirements for all employee benefit plans. The amendments changed the applicability of the disclosure from “Publicly Traded Company” to “Public Business Entity.” Additionally the amendments added the Master Glossary term public business entity to FASB ASC 825-10-20. The definition of public business entity states neither a not-for-profit entity nor an employee benefit plan is a public business entity. FASB ASU No. 2016-01 clarifies that the fair value of financial instrument disclosures are only required for public business entities.

Given the change in definition, on adoption of FASB ASU No. 2016-01, employee benefit plans are no longer required to make disclosures related to the fair value of financial instruments not recorded at fair value. This disclosure was generally a paragraph added to the fair value measurement disclosures, and, in the case of a leveraged ESOP, a paragraph in the notes payable disclosure.

For public business entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. For all other entities including not-for-profit entities and employee benefit plans within the scope of FASB ASC 960 through 965 on plan accounting, the amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019.

This edition of the guide has not been updated to reflect changes as a result of this ASU. Readers are encouraged to consult the full text of this ASU on FASB’s website at www.fasb.org.

FASB ASU No. 2017-06, Employee Benefit Plan Master Trust Reporting

In February 2017, FASB issued ASU No. 2017-06, Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting (a consensus of the Emerging Issues Task Force), to improve the usefulness of the information reported to users of employee benefit plan financial statements and to provide clarity to preparers and auditors. ASU No. 2017-06 relates primarily to the reporting by a plan for its interest in a master trust. The amendments clarify presentation requirements for a plan’s interest in a master trust and require more detailed disclosures of the plan’s interest in the master trust. The amendments also eliminate a redundancy relating to 401(h) account disclosures.

The amendments in this ASU apply to reporting entities within the scope of FASB ASC 960, 962, or 965. They are effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. An entity should apply the amendments in this ASU retrospectively to each period for which financial statements are presented.

This edition of the guide has not been updated to reflect changes as a result of this ASU. Readers are encouraged to consult the full text of this ASU on FASB’s website at www.fasb.org.

The Auditor’s Consideration of an Entity’s Ability to Continue as a Going Concern

In February 2017, the ASB issued SAS No. 132, The Auditor’s Consideration of an Entity’s Ability to Continue as a Going Concern (AU-C sec. 570). This SAS addresses the auditor’s responsibilities in the audit of financial statement relating to the entity’s ability to continue as a going concern and the implications for the auditor’s report. This SAS applies to all audits of a complete set of financial statements, regardless of whether the financial statements are prepared in accordance with a general purpose or a special purpose framework.

Under the going concern basis of accounting, the financial statements are prepared on the assumption that the entity is a going concern and will continue its operations for a reasonable period of time. A complete set of general purpose financial statements is prepared using the going concern basis of accounting, unless the liquidation basis of accounting is appropriate.

Special purpose financial statements may or may not be prepared in accordance with an applicable financial reporting framework for which the going concern basis of accounting is relevant. As a result, when the going concern basis of accounting is not relevant, the requirement of this SAS to obtain sufficient appropriate audit evidence regarding, and conclude on, the appropriateness of management’s use of the going concern basis of accounting do not apply. However, irrespective of whether the going concern basis of accounting is relevant in the preparation of special purpose financial statements, the requirements of this SAS apply regarding the auditor’s responsibilities to perform the following:

a.    Conclude, based on the audit evidence obtained, whether substantial doubt exists about an entity’s ability to continue as a going concern for a reasonable period of time

b.    Evaluate the possible financial statement effects, including the adequacy of disclosure regarding the entity’s ability to continue as a going concern for a reasonable period of time

The auditor’s responsibilities under this SAS apply even if the applicable financial reporting framework used in the preparation of the financial statements does not include an explicit requirement for management to make a specific evaluation of the entity’s ability to continue as a going concern.

This SAS is effective for audits of financial statements for periods ending on or after December 15, 2017.

This edition of the guide has been updated to reflect changes as a result of this ASU. Readers are encouraged to consult the full text of this ASU on FASB’s website at www.fasb.org.

PCAOB Auditing Standard 3101, The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion

In June 2017, the PCAOB adopted a new auditor reporting standard, The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion, that will replace portions of AS 3100, Reports on Audited Financial Statements. AS 3101 and related amendments will require the auditor to provide new information about the audit and make the auditor’s report more informative and relevant to investor’s and other financial statement users. The final standard retains the pass/fail opinion of the existing auditor’s report but makes significant changes to the existing auditor’s report. The final standard will generally apply to audits conducted under PCAOB standards.

In October 2017, the SEC approved the final standard. The final standard and amendments will take effect as follows:

•     All provisions other than those related to critical audit matters will take effect for audits of fiscal years ending on or after December 15, 2017; and

•     Provisions related to critical audit matters will take effect for audits of fiscal years ending on or after June 30, 2019, for large accelerated filers; and for fiscal years ending on or after December 15, 2020, for all other companies to which the requirements apply.

The new standard allows for early adoption.

This edition of the guide has been updated to reflect changes as a result of this new PCAOB auditor reporting standard. Readers are encouraged to consult the full text of this auditor reporting standard on the PCAOB’s website at www.pcaobus.org.

PCAOB Staff Guidance Changes to the Auditor’s Report Effective for Audits of Fiscal Years Ending on or After December 15, 2017

On December 28, 2017, the PCAOB issued Staff Guidance, Changes to the Auditor’s Report Effective for Audits of Fiscal Years Ending on or After December 1, 2017, which was issued to help firms when implementing changes to the auditor’s report related to AS 3101.

The standard retains the pass/fail opinion of the existing auditor's report but makes significant changes to the report. All of the changes, except those relating to critical audit matters (CAMs), are effective for audits of fiscal years ending on or after December 15, 2017. These changes make a number of improvements that are primarily intended to clarify the auditor's role and responsibilities related to the audit of the financial statements, provide additional information about the auditor, and make the auditor's report easier to read. This guidance addresses these key elements of the revised auditor's report.

The other significant change, auditor communication of CAMs, is permissible on a voluntary basis but will not be required until audits of fiscal years ending on or after June 30, 2019 (for audits of "large accelerated filers"), or December 15, 2020 (for audits of all other companies to which the requirements apply).

Attestation Clarity Project, Statement on Standards for Attestation Engagements No. 18

To address concerns over the clarity, length, and complexity of its standards, the ASB established clarity drafting conventions and undertook a project to redraft all the standards it issues in clarity format. The redrafting of Statements on Standards for Attestation Engagements (SSAEs or attestation standards) in SSAE No. 18 (statement) represents the culmination of that process. This statement redrafted all SSAEs, except for the following:

•    Chapter 7, “Management’s Discussion and Analysis,” of SSAE No. 10, Attestation Standards: Revision and Recodification (AT sec. 701)

The ASB decided not to clarify AT section 701 because practitioners rarely perform attestation engagements to report on management’s discussion and analysis prepared pursuant to the rules and regulations adopted by the SEC. Therefore, the ASB decided that AT section 701 should be retained in its current unclarified format as AT-C section 395 until further notice.

•     SSAE No. 15, An Examination of an Entity’s Internal Control Over Financial Reporting That Is Integrated With an Audit of Its Financial Statements, and related Attestation Interpretation No. 1, “Reporting Under Section 112 of the Federal Deposit Insurance Corporation Improvement Act” (AT sec. 501 and 9501)

The ASB concluded that because engagements performed under AT section 501 are required to be integrated with an audit of financial statements, the content of AT section 501 should be moved to the Statements on Auditing Standards (SASs). As a result, in October 2015, the ASB issued SAS No. 130, An Audit of Internal Control Over Financial Reporting That Is Integrated With an Audit of Financial Statements (AU-C sec. 940). AT section 501 and the related interpretation were withdrawn when SAS No. 130 became effective; the effective date for SAS No. 130 is for integrated audits for periods ending on or after December 15, 2016.

The attestation standards were developed and issued in the form of SSAEs and were codified into sections. This statement recodifies the “AT” section numbers designated by SSAE Nos. 10–17 using the identifier “AT-C” to differentiate the sections of the clarified attestation standards (AT-C sections) from the attestation standards that were superseded by this statement (AT sections). The AT sections in AICPA Professional Standards remained effective through April 2017, by which time substantially all engagements for which the AT sections were still effective were expected to be completed.

The attestation standards have been redrafted in accordance with the clarity drafting conventions, which include the following:

•     Establishing objectives for each AT-C section

•     Including a definitions section, where relevant, in each AT-C section

•     Separating requirements from application and other explanatory material

•     Numbering application and other explanatory material paragraphs using an A- prefix and presenting them in a separate section that follows the requirements section

•     Using formatting techniques, such as bulleted lists, to enhance readability

•     Including, when appropriate, special considerations relevant to audits of smaller, less complex entities within the text of the AT-C section

•     Including, when appropriate, special considerations relevant to examination, review, or agreed-upon procedures engagements for governmental entities within the text of the AT-C section

Proposed SAS, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA (Exposure Draft)

The ASB recently released an exposure draft of a proposed SAS, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA (Exposure Draft). The proposed SAS reflects the ASB's proposal for a new reporting model for audits of ERISA plans that, among other things, changes the form and content of the auditors' report on an employee benefit plan audit and prescribes certain new performance requirements.

The proposed SAS would apply to audits of single employer, multiple employer, and multiemployer plans subject to ERISA. In summary, the proposed SAS includes:

•     New engagement acceptance requirements.

•     New performance requirements that serve as a basis for a new reporting requirement.

•     Required audit procedures to be performed relating to the investment information certified by a qualified institution as permitted by ERISA.

•     A new form of report specific to an audit of an ERISA plan when management imposes an ERISA-permitted audit scope limitation.

•     A required emphasis-of-matter paragraph in the auditor’s report when certain situations exist and are disclosed in the notes to the financial statements.

•     Considerations relating to the Form 5500 filing, which the auditor’s report accompanies.

•     Expanded communication on the ERISA supplemental schedules.

The anticipated effective date for the proposed SAS is for audits of ERISA plan financial statements for periods ending on or after December 15, 2018. The public comment period closed on September 29, 2017.

In addition, in November 2017, the ASB issued the following exposure drafts that may affect the proposed employee benefit plan reporting standard mentioned previously:

•     Auditor Reporting and Proposed Amendments Addressing Disclosures in the Audit of Financial Statements,

•     The Auditor’s Responsibilities Relating to Other Information Included in the Annual Reports, and

•     Omnibus Statement of Auditing Standards—2018

The public comment period closes on May 15, 2018.

This edition of the guide has not been updated to reflect proposed changes. Readers are encouraged to consult the full text of the proposed SASs on the AICPA’s website at www.aicpa.org/research/exposuredrafts/accountingandauditing.

Note: Peer Review of Audits of Employee Benefit Plan Financial Statements

The AICPA peer review board designated certain types of audit engagements of significant public interest as a “must select” engagement. If a firm is conducting these types of engagements, that firm must select at least one of each type for peer review. Employee benefit plan audits are “must select” engagements. As these engagements would be performed under the SASs, these engagements would be subject to peer review and would require the firm to undergo a system review. If a firm has never been peer reviewed and decides to perform an audit of employee benefit plan financial statements (and is required to be enrolled in the AICPA’s peer review program), the due date for this initial peer review is ordinarily eighteen months from the date the firm enrolled in the Program, or should have enrolled, whichever date is earlier. Additionally, a firm may be deemed as failing to cooperate if they omit or misrepresent information relating to its accounting and auditing practice as defined by the AICPA Standards for Performing and Reporting on Peer Reviews. If a firm is dropped or terminated for not accurately representing information relating to its accounting and auditing practice as defined by the AICPA Standards for Performing and Reporting on Peer Reviews, the matter will result in referral to the AICPA Professional Ethics Division for investigation of a possible violation of the AICPA Code of Professional Conduct.

Notes

1

All ET sections can be found in AICPA

Professional Standards

.

2

All AU-C sections can be found in AICPA

Professional Standards

.

3

All AT-C sections can be found in AICPA

Professional Standards

.

4

All AR-C sections can be found in AICPA

Professional Standards

.

5

The QC sections can be found in AICPA

Professional Standards

.

6

All AS sections can be found in

PCAOB Standards and Related Rules

.

7

All Q&As can be found in

Technical Questions and Answers

.

8

For further information, see the Minutes of March 1, 2017, FASB meeting, which are available on the FASB website.

__________________________

TABLE OF CONTENTS

Cover

Title Page

Copyright

Preface

Chapter 1 Introduction and Background

Introduction

Applicability to Governmental Entities

Background

Defined Contribution Retirement Plans

Employee Stock Ownership Plans

Defined Benefit Pension Plans

Health and Welfare Benefit Plans

Financial Accounting and Reporting for ERISA Plans

Governmental Regulations

Reporting and Disclosure Requirements

Plans Pursuant to the SEC Reporting Requirements

Audit Requirements

Operation and Administration

Accounting Records

Chapter 2 Planning and General Auditing Considerations

Overview

Categories of Professional Requirements

Interpretive Publications

Quality Control Standards, Including Client Acceptance and Continuance and Engagement Quality Control Reviews

Client Acceptance and Continuance

Engagement Quality Control Review

Audit Scope

Limited-Scope Audit Exemption

Other Applicable Auditing Guidance

Communication With Those Charged With Governance

Engagement Letter

Audit Planning

Coordination of Plan Sponsor and Plan Audits

Considerations for Payroll and Demographic Data

Use of Internal Auditors

Involvement of Professionals Possessing Specialized Skills

Financial Reporting Considerations

Communication and Coordination

Audit Risk

Transactions Processed by Service Organizations

Using the Work of a Specialist

Background

Decision to Use the Work of a Specialist

Related-Party and Party in Interest Transactions

Audit Considerations

Consideration of Laws and Regulations and Prohibited Transactions

Communication With Responsible Parties

Effect on the Auditor’s Report

Accounting Estimates

Going Concern Considerations

Initial Audits of the Plan

Chapter 3 Audit Risk Assessment

Overview

Audit Risk

Planning Materiality

Performance Materiality

Understanding the Entity and Its Environment, Including Its Internal Control

Risk Assessment Procedures

Discussion Among the Engagement Team

The Entity and Its Environment

The Entity’s Internal Control

Risks Assessment and the Design of Further Audit Procedures

Identifying and Assessing the Risks of Material Misstatement

Use of Assertions in Assessment of Risks of Material Misstatement

Other Risk Assessment Considerations

Designing and Performing Further Audit Procedures

Evaluation of Misstatements Identified During the Audit

Audit Documentation

Consideration of Fraud

Risk Assessment Procedures and Related Activities

Identification and Assessment of the Risks of Material Misstatement Due to Fraud

Evaluation of Audit Evidence

Chapter 4 Internal Control

Using a Service Organization and Related Audit Considerations

Chapter 5 Defined Contribution Retirement Plans Including Employee Stock Ownership Plans

Chapter 5A Defined Contribution Retirement Plans

Introduction and Background

Administration and Operation of a DC Plan

Accounting, Reporting, and Auditing DC Plans

Financial Statements

Net Assets Available for Benefits

Participant Allocations

Cash Balances

Investments

Participant Loans (Notes Receivable From Participants)

Contributions and Contributions Receivable

Rollover Contributions

Other Receivables

Forfeitures

Operating Assets

Accrued Liabilities

Changes in Net Assets Available for Benefits

Participant Benefits, Distributions, and Withdrawals

Benefit Payments

Plan Expenses

Financial Statement Disclosures

Fair Value Measurements

Derivatives and Hedging

Master Trusts

Financial Instruments

Risks and Uncertainties

403(b) Plans or Arrangements

Plan Transfers (Plan Mergers, Spin-Offs, and Other Transfers)

Going Concern

Terminating Plans (Full and Partial)

Changes in Service Providers

Auditing Considerations for DC Plans

Determining Audit Strategy

Participant Accounts and Allocations

Cash Balances

Investments and Related Income

Notes Receivable From Participants (Participant Loans)

Contributions and Certain Participant Data

Contributions and Contributions Receivable

Rollover Contributions

Other Receivables

Forfeitures

Operating Assets

Accrued Liabilities

Participant Benefits, Distributions and Withdrawals

Plan Expenses

Plan Transfers (Plan Mergers, Spin-Offs, and Other Transfers)

Terminating Plans

Changes in Service Providers

SEC Reporting Requirements

Chapter 5B Employee Stock Ownership Plans

Introduction and Background

Participant Allocations

Valuation Terminology

Contributions

Distributions

Voting Rights

Put Option

Diversification

Financing Employer Stock Purchases

Suspense Account (Unallocated Shares)

Share Release Formula

Debt Service Payment

Administration and Operation of an ESOP

Regulatory Reporting Requirements

Accounting, Reporting, and Auditing ESOPs

Financial Statements

Net Assets Available for Benefits

Allocations

Cash Balances

Investments

Valuation Techniques

Participant Loans

Contributions and Contributions Receivable

Rollover Contributions

Other Receivables

Forfeitures

Leveraged ESOP Debt

Accrued Liabilities

Other Liabilities

Changes in Net Assets Available for Benefits

Participant Benefits, Distributions, and Withdrawals

Plan Expenses

Financial Statement Disclosures

Fair Value Measurements

Financial Instruments

Risks and Uncertainties

Subsequent Event Considerations for ESOPs

Prohibited Transactions and Party in Interest Transactions

Plan Transfers (Plan Mergers, Spin-Offs, and Other Transfers)

Going Concern

Terminating Plans (Full and Partial)

Changes in Service Organization

Auditing Considerations for ESOPs

Determining Audit Strategy

Valuation Terminology

Risk Assessment Considerations

Participant Accounts and Allocations

Cash Balances

Investments and Related Income

Limited-Scope Auditing Considerations

Contributions and Certain Participant Data

Contributions and Contributions Receivable

Rollover Contributions

Forfeitures

Leveraged ESOP Debt and Interest Expense

Accrued Liabilities

Other Liabilities—Employer Advances

Participant Benefits, Distributions and Withdrawals

Floor Price Protection

Plan Expenses

Plan Mergers and Spin-offs

Terminating Plans (Full and Partial) or Frozen Plans

Changes in Service Providers

Appendix A — Defined Contribution Retirement Plans

Appendix B — Regulations, Administration, and Operation of an ESOP

Chapter 6 Defined Benefit Pension Plans

Introduction and Background

Administration and Operation of a DB Plan

Accounting, Reporting, and Auditing DB Plans

Financial Statements

Net Assets Available for Benefits

Cash Balances

Investments

Contributions and Contributions Receivable

Other Receivables

Operating Assets

Accrued Liabilities

Changes in Net Assets Available for Benefits

Benefit Payments

Plan Expenses

Accumulated Plan Benefits

Changes in Accumulated Plan Benefits

Financial Statement Disclosures

Fair Value Measurements

Derivatives and Hedging

Master Trusts

Financial Instruments

Risks and Uncertainties

Plan Transfers (Plan Mergers, Spin-Offs, and Other Transfers)

Going Concern

Terminating Plans (Full or Partial) and Frozen Plans

Terminating Plans

Frozen Plans

Changes in Service Providers

Auditing Considerations for DB Plans

Determining Audit Strategy

Cash Balances

Investments and Related Income

Contributions and Contributions Receivable

Other Receivables

Operating Assets

Accrued Liabilities

Benefit Payments

Plan Expenses

Accumulated Plan Benefits and Participant Census Data

Plan Transfers (Plan Mergers, Spin-Offs, and Other Transfers)

Terminating Plans (Full or Partial) or Frozen DB Plans

Changes in Service Providers

Appendix A — Defined Benefit Pension Plan Operations and Administration

Chapter 7 Health and Welfare Benefit Plans

Introduction and Scope

Trust Arrangements

Defining the Reporting Entity

Background

Administration of a Health and Welfare Benefit Plan

HIPAA Considerations

Annual Health Care Process

Health and Welfare Arrangements

Accounting and Reporting for H&W Plans

Financial Statements

Defined Benefit H&W Plan

Defined Contribution H&W Plan

Net Assets Available for Benefits

Cash

Investments

401(h) Accounts

Contributions and Contributions Receivable

Other Receivables

Deposits With and Receivables From Insurance Companies and Other Service Providers

Operating Assets

Accrued Liabilities

Changes in Net Assets Available for Benefits

Benefit Payments

Insurance Premiums

Plan Expenses

Benefit Obligations

Claims

Premiums Due Under Insurance Arrangements

Accumulated Eligibility Credits

Postemployment Benefits

Postretirement Benefit Obligations

Changes in Benefit Obligations

Financial Statement Disclosures

Fair Value Measurements

Derivatives and Hedging

Financial Instruments

Risks and Uncertainties

Plan Transfers (Plan Mergers, Spin-Offs, and Other Transfers)

Going Concern

Terminating Plans

Terminating Trusts

Tax Considerations

Changes in Service Providers

Auditing Considerations for H&W Plans

Determining Audit Strategy

Confidentiality or Indemnification Agreements

Cash Balances

Investments and Related Income

Contributions and Contributions Receivable

Other Receivables

Deposits With, and Receivables From, Insurance Companies and Other Service Providers

Operating Assets

Accrued Liabilities

Benefit and Claim Payments

Insurance Premiums

Plan Expenses

Benefit Obligations—Defined Benefit H&W Plans

Defined Contribution H&W Plans

Plan Transfers (Plan Mergers, Spin-Offs, and Other Plan Transfers)

Terminating Plans or Frozen H&W Plans

Changes in Service Providers

Appendix A — The Annual Health Care Process

Appendix B — Examples of Health and Welfare Arrangements

Appendix C — Risk Assessment and Internal Control Considerations—Claim Payments

Chapter 8 Investments

Introduction

Background

Investment Activities and the Use of Service Organizations

The Investment Manager or Adviser

The Custodian

The Trustee (Directed and Discretionary)

Investment Recordkeeper

Valuation of Investments

Fair Value Measurement

Definition of Fair Value

Definition of Readily Determinable Fair Value

Valuation Techniques

The Fair Value Hierarchy

Considerations When Determining Fair Value

Fair Value Disclosures

Accounting and Disclosure for Investments

Statement of Net Assets Available for Benefits

Statement of Changes in Net Assets Available for Benefits

RICs (Mutual Funds)

Investments in CCTs

Master Trust Arrangements

Other Investments

Private Investment Funds

Separately Managed Accounts

Investments Reported as 103-12 Entities as Required by the DOL

Contracts With Insurance Entities

DA Contracts

IPG Contracts

Other Investment Arrangements With Insurance Entities

Derivatives and Hedging Activities

Offsetting of Derivatives, Repurchase Agreements, and Securities Lending Transactions

Securities Lending Arrangements

Financial Statement Disclosures

Insurance Contracts

Fair Value Measurements

Financial Instruments

Risks and Uncertainties

Master Trusts

Derivatives and Hedging Activities

Securities Lending

Auditing Considerations for Investments

Risk Assessment and Internal Control Considerations for Investments

Determining Audit Strategy

Investments and Related Income

Audit Procedures for Certain Plan Investments

Investments in Securities That Are Valued Based on the Investee’s Financial Results

Limited-Scope Auditing Procedures

Chapter 9 Plan Tax Status

Nondiscrimination and Other Operating Tests for Plan Qualification

Unrelated Business Taxable Income

Income Taxes

Auditing Considerations

Relevant Assertions

Examples of Identified Risks of What Can Go Wrong at the Relevant Assertion Level

Example Audit Procedures to Consider

Chapter 10 Concluding the Audit and Other Auditing Considerations

The Form 5500

Reports Issued Prior to the Form 5500 Filing

Commitments and Contingencies

Litigation, Claims, and Assessments

Subsequent Events

Evaluating the Risk of Material Misstatement Due to Fraud at or Near the End of the Audit

Plan Representations

Management Representation Letter

Communications With Those Charged With Governance

Significant Findings From the Audit

Communicating Internal Control Related Matters Identified in an Audit

DOL Access to Auditors’ Working Papers

Chapter 11 The Auditor’s Report

What This Chapter Provides

Background

Forming an Opinion

Addressing the Auditor’s Report

Dating of the Auditor’s Report

Content of the Auditor’s Report

Supplemental Schedules Relating to ERISA and DOL Regulations (Full-Scope Audits for Nonissuers)

Full-Scope Audit Considerations

Unmodified Opinions—Defined Contribution Retirement Plans

401(k) Plan (U.S. GAAP)

401(k) Plan—Special Purpose Framework

Unmodified Opinions—Defined Benefit Pension Plans

Illustration of Auditor’s Report on Financial Statements of Defined Benefit Pension Plan Assuming End-of-Year Benefit Information Date

Illustration of Auditor’s Report on Financial Statements of DB Plan Assuming Beginning-of-Year Benefit Information Date

Unmodified Opinion—Health and Welfare Benefit Plans

Unmodified Opinion—Reporting on the Financial Statements of a Trust

Unmodified Opinion—Form 11-K Filings With the SEC

Form 11-K Audit Report for Filing With the SEC

Form 11-K Audit Report for Filing With the DOL

Full-Scope Audits—Unmodified Opinions on the Financial Statements With Modifications to the Report on Supplementary Information

Departures From, or Omission of, Supplementary Information Required by the DOL

Omitted Information in a Schedule Required Under DOL Regulations

Omitted Schedule Required Under DOL Regulations

Qualified Report on Supplementary Information—Omitted Information

Prohibited Transactions

Qualified Report—Disclosure of Material Prohibited Transaction With Party in Interest Omitted

Disclosure of Immaterial Prohibited Transaction With Party in Interest Omitted

Prohibited Transaction With Party in Interest That Is Also Considered a Related-Party Transaction

Limited-Scope Audits Under DOL Regulations

Reporting on Supplemental Schedules—Limited-Scope Audit Considerations

Standard Limited-Scope Audit Report

Limited-Scope Audit in Prior Year

Limited-Scope Audit in Current Year

Limited-Scope Audit in Current Year, Prior Year Limited-Scope Audit Performed by Other Auditors

Change in Trustee

Reporting on Supplemental Schedules in a Limited-Scope Audit

Standard Limited-Scope Audit Reports With Modifications to the Report on Supplemental Schedules

Omitted Schedule Required Under DOL Regulations in a Limited-Scope Engagement

Modified Opinion on Supplemental Schedules—Omitted Information Required Under DOL Regulations in a Limited-Scope Engagement

Other Scope Limitations

Disclaimer of Opinion on Audit of Multiemployer Pension Plan Due to Scope Limitation

Accumulated Plan Benefits—GAAP Departures and Changes in Accounting Estimates

Terminating Plans

Substantial Doubt With Respect to Going Concern

Initial Audits of Plans

Prior Period Financial Statements Not Audited

Appendix A ERISA and Related Regulations

Appendix B Examples of Controls

Appendix C Illustrations of Financial Statements: Defined Contribution Retirement Plans

Appendix D Illustration of Financial Statements: Employee Stock Ownership Plans

Appendix E Illustrations of Financial Statements: Defined Benefit Pension Plans

Appendix F Illustrations of Financial Statements: Health and Welfare Benefit Plans

Appendix G Consideration of Fraud in a Financial Statement Audit

Appendix H Schedule of Changes Made to the Text From the Previous Edition

Glossary

EULA

Guide

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