What Plan Sponsors should know about SAS 136
2 November 2021
The AICPA Auditing Standards Board (ASB) issued SAS No. 136, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA, in July 2019. SAS No. 136 adds new performance requirements for an audit of the financial statements of employee benefit plans subject to ERISA and changes the form and content of the auditor’s report.
These changes begin with either the 2020 or 2021 plan year financial statements. Early adoption for the 2020 plan year financial statements was allowed and 2021 plan year financial statements must follow the new auditing standards to perform and report on your plan financial statement audit.
SAS No. 136 establishes the requirements for ERISA Section 103(a)(3)(C) audits. An audit performed pursuant to ERISA Section 103(a)(3)(C) will no longer be referred to as a “limited scope audit”. The impact for Plan Sponsors and Plan management will first be seen in the engagement letter. In the engagement letter the auditor will be requesting that acknowledgement be made in the management’s responsibilities section for maintaining a current plan instrument, administering the plan, and providing the auditor with a substantially complete draft Form 5500 prior to the dating of the auditor’s report. In addition, the new standard requires that the auditor obtain certain written management representations at the conclusion of the engagement regarding those responsibilities. It also includes new acknowledgements related to management’s responsibilities when management elects to have an ERISA Section 103(a)(3)(C) audit, including that the investment information is prepared and certified by a qualified institution, the certification meets DOL requirements, and the certified investment information is appropriately measured, presented, and disclosed in accordance with the applicable financial reporting framework. With these new requirements, it is possible that additional information will be requested from you in order to perform the plan audit under SAS No. 136, which may lead to you needing to spend more time preparing for the plan audit.
To learn more about the new standard and to prepare for how the new standard will affect your plan audit, you can read the following:
Plan Advisory, New audit standard for employee benefit plans: An overview for plan management, provides plan management with an understanding of the changes to audits of employee benefit plan financial statements subject to ERISA following the issuance of SAS No. 136, as amended.
SAS 136 at a Glance provides a glance at what happened, what changed and the next steps.
Common deficiencies in ERISA Section 103(a)(3)(C) audit certifications helps plan administrators understand their responsibilities for determining the acceptability of an ERISA Section 103(a)(3)(C) certification; auditors understand their responsibilities for determining whether a certification can be relied upon to perform an ERISA Section 103(a)(3)(C) audit; both plan administrators and auditors identify common deficiencies in certifications. It also includes an illustration of a proper certification.
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