Large Plan Audits

[T.J. Orr]

I am looking for information on independence in terms of a large plan audits. Many CPA firms are branching out to provide brokerage and plan administrative services to compliment their accounting, tax and audit services. DOL reg 14370, sec. 2509.75-9 addresses the independence issue, but was written in 1975. I am uanble to find anything providing more up-to-date guidance in our new environment. Specifically, we are wondering if our CPA firm can maintain independence where a division of itself (a member per the reg) is providing third party administration and there is an outside recordkeeper (on a daily valuation platform) NOT utilizing our brokerage services. (It seems clear that the use of our staff investment advisor would preclude us from performing the audit.)

[E as in ERISA]

My understanding is that the accounting office of the DOL has indicated that a CPA firm can perform recordkeeping and still do an audit. The audit is performed at the plan level on the trust financial statements; whereas recordkeeping is mostly a matter of participant records. I'm not sure how the issue of participant testing is addressed. And, of course, it depends on what services are actually performed.

[BeckyMiller]

My recent conversations with the Chief Accountant's office at the PWBA would lead me to a different conclusion that what Katherine has outlined. However, the PWBA/DOL has been extremely cautious in issuing any guidance beyond the 1975 interpretive bulletin. They make many, negative public comments. The AICPA has specific guidance on these matters which can be found on their web site at http://www.aicpa.org/about/code/et101.htm#101-3

My current advice is that if the CPA firm provides any service to the plan that impacts items subject to the audit, at a minimum the auditor has to be absolutely scrupulous is the conduct of the audit - no short-changing of procedures, relying on representations from other members of his or her firm, etc.

[JohnCheek]

I also had conversations with the Office of the Chief Acct; my understanding is that the DOL does not want accountants auditing their own work.

I would be very surprised if a CPA firm providing TPA services was considered independant for DOL purposes. And the idea of providing brokerage services to an audit client makes me really uncomfortable...

I suspect that those CPA firms that want to provide brokerage and TPA services might have to give up plan audits.