U.S. Department of Labor’s Tips for Selecting and Monitoring a Plan Auditor

 

 

 

Russell E. Majkrzak , CPA

Senior Manager

majkrzakr@hwco.com

 

In mid-November, 2015, the Chief Accountant of the U.S. Department of Labor (DOL) sent out an email to plan administrators related to selecting a qualified CPA firm to audit your plan’s financial statements. This email referenced a recent study completed by the DOL (which can be found on the DOL’s website) which concluded that due to the unique audit and reporting requirements related to employee benefit plan audits, plan administrators should take care when selecting their CPA firm to ascertain that the CPA firm is qualified to perform the plan audit. HW&Co is qualified and, in fact, currently audits many employee benefit plans, and as a member of the AICPA Employee Benefit Plan Audit Quality Center, HW&Co must meet additional professional standards including having our audit staff obtaining a specific number of training hours over a three-year period and the additional internal monitoring and peer review requirements.  HW&Co, since its inception, has received the best Peer Review results possible with our most recent Peer Review receiving a rating of “pass with no deficiencies”. Additionally, the DOL has performed a DOL desk audit for one of our plan audits with no findings identified. If HW&Co does not currently perform your plan audit, please consider having HW&Co become your plan auditors. If you have any questions or concerns, please contact your HW&Co Executive or Joe Sbrocco, CPA, CGMA at 877-FOR-HWCO.



FASB Provides Guidance for Employee Benefit Plans

 

Tony S. LaNasa, CPA, CFE
Managing Partner-Columbus Office
lanasa@hwco.com
 

On Friday, July 31^st, the Financial Accounting Standards Board (FASB) provided guidance designed to help in simplifying the accounting of employee benefit plans in a three-part document included in  Accounting Standard Update (ASU) No. 2015-12, Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plan (Topic 962, Health and Welfare Benefit Plans (Topic 965).

Part I of the update assigns contract value as the only required measure for fully benefit-responsive investment contracts.  This part will reduce the complexity of reporting for fully benefit-responsive investment contracts while still requiring disclosures helping users understand these investment contract types.

 Part II, of the update eliminates requirements for participant-directed investments and nonparticipant-directed investments to disclose:

·         The net appreciation or depreciation for investments by general type.

·         Individual investments representing five percent or more of net assets available for benefits.

Stakeholders informed FASB that disclosing similar investment information in multiple ways is costly for preparers and makes the financial statements more difficult to use.  It is important to note that FASB will still require net appreciation or depreciation in investments to be presented in the aggregate, but it will no longer require amounts to be disaggregated and disclosed by general type.

 Finally, Part III relates to an area of several potential simplifications submitted by stakeholders. It provides a practical expedient allowing the employer to measure and define benefit plan assets on a month-end date nearest to the employer’s fiscal year-end, when the fiscal period does not coincide with a month-end.

 These amendments in each part of the ASU will be effective for fiscal years beginning after December 15, 2015. Earlier application is permitted, and the amendments in Parts I and II should be applied retrospectively for all financial statements presented.  Part III should be applied prospectively.