Guest Taxman Posted June 13, 2003 Posted June 13, 2003 It is my understanding that the DOL has a new position regarding limited scope audits that it unleashed at the AICPA Employee Benefit Conference in May. Apparently, their position now is that the certification does not apply to the allocation of investment income to participants. Therefore, they expect to see work in a limited scope audit where the allocation (and therefore calculation) to the participant of investment income is tested. They have conceded that if there is an adequate SAS 70 report covering that area, then no testing is needed. Any thoughts? I have confirmed with several policy setters in the Big 5 that they are in disagreement with the DOL's position on this.
Guest LVanSteeter Posted June 17, 2003 Posted June 17, 2003 One of the auditing firms I just spoke with indicated that he attended a recent conference. He stated that this point was 'stressed' by the DOL. He does not work for one of the big firms. I hope he is incorrect!
E as in ERISA Posted June 18, 2003 Posted June 18, 2003 Doesn't the certification by the trustee just relate to the PLAN/TRUST level FINANCIAL information? And the testing of the PARTICIPANT-level detail is for a different purpose -- to sample test whether the plan is operating in accordance with the regulatory requirements -- including the requirement to operate the plan according to its terms.
Guest LVanSteeter Posted June 18, 2003 Posted June 18, 2003 Our SAS 70 specifically audits "Controls provide reasonable assurance that investment income is accurately recorded in a timely manner in appropriate participant and plan level accounts." One would think that this would be 'adequate' SAS 70 reporting. . . Does anyone know where this new DOL requirement is referenced?
Guest Taxman Posted June 18, 2003 Posted June 18, 2003 Doesn't the certification by the trustee just relate to the PLAN/TRUST level FINANCIAL information? And the testing of the PARTICIPANT-level detail is for a different purpose -- to sample test whether the plan is operating in accordance with the regulatory requirements -- including the requirement to operate the plan according to its terms. Katherine No..and no... The limited scope exception applies to investments, investment income, and investment transactions. There is no specification that it is plan level or participant, but because it does not specify, one can only go on the plain language of the CFR. The testing of participant level details is for a different purposes, but you misunderstood my question. We have always testing participant detail for contributions, participant date (eligibilty and enrollment), benefit payments, etc. The DOL has all of a sudden come out and said that now you must test allocations of investment income to participants.
Guest Taxman Posted June 18, 2003 Posted June 18, 2003 Our SAS 70 specifically audits "Controls provide reasonable assurance that investment income is accurately recorded in a timely manner in appropriate participant and plan level accounts."One would think that this would be 'adequate' SAS 70 reporting. . . Does anyone know where this new DOL requirement is referenced? The new DOL position is based off of the fact (only my guess) that it doesn't say anywhere that it apples to participant level testing.
Guest SBlack Posted June 19, 2003 Posted June 19, 2003 Actually, I worked for one of the big guys and now am in a local firm, but the last two peer reviews that I have gone through (both at international firm) have been very specific regarding the allocation of investment income. I'm not so sure that this is a DOL thing, but more of an AICPA requirement. But 9 times out of 10, the SAS70 will cover this adequately. This is very difficult to test if not. This is really nothing new - we need to make sure this is covered.
ljr Posted June 19, 2003 Posted June 19, 2003 From my experience as a bank trustee, we certify our retirement plan trust accounting statements at the plan level. It's always been this way. We also do participant recordkeeping - daily and balance forward. When accounting firms are auditing our clients, we're always asked to provide samplings of individual participant statements and it's my understanding the accountants are testing them for both proper allocation of contributions and investment earnings and that it's always been that way. They also gather data to document that trust and recordkeeping are in balance. So I'm not sure I understand what your're saying has changed. Are you saying that a "good" SAS 70 from the recordkeeping provider could relieve the auditors of some testing? Just curious!
Guest Taxman Posted June 20, 2003 Posted June 20, 2003 Actually, I worked for one of the big guys and now am in a local firm, but the last two peer reviews that I have gone through (both at international firm) have been very specific regarding the allocation of investment income. I'm not so sure that this is a DOL thing, but more of an AICPA requirement. But 9 times out of 10, the SAS70 will cover this adequately. This is very difficult to test if not. This is really nothing new - we need to make sure this is covered. Sblack I do work for one of the "big guys" and have also been in touch with the policy setters for the others, and many are saying they are not going to follow the DOL. Believe me, there is no AICPA requirement. This isn't a rumor mill sort of thing. My understanding is that the AICPA EBP conference was on fire with this issue as soon as the DOL guy opened his mouth. It was such an issue that CPAs demanded to discuss it even in areas of the 3 day CPE that had nothing to do with auditing. This is clearly a new DOL position...
Guest Taxman Posted June 20, 2003 Posted June 20, 2003 From my experience as a bank trustee, we certify our retirement plan trust accounting statements at the plan level. It's always been this way. We also do participant recordkeeping - daily and balance forward. When accounting firms are auditing our clients, we're always asked to provide samplings of individual participant statements and it's my understanding the accountants are testing them for both proper allocation of contributions and investment earnings and that it's always been that way. They also gather data to document that trust and recordkeeping are in balance.So I'm not sure I understand what your're saying has changed. Are you saying that a "good" SAS 70 from the recordkeeping provider could relieve the auditors of some testing? Just curious! ljr Believe me, you would know if they were testing allocation of investment income. That requires having the trade authorizations pulled for that entire sample.
Guest beltrand Posted June 21, 2003 Posted June 21, 2003 People: Certification NEVER covered the allocation of income at the participant level. Certification is ONLY at the plan level. Only a SAS 70 can (it might not be a "good" SAS 70) attest to participant level information. The DOL is not taking a new position on limited scope (e.g. certification is present) audits. We auditors always have had a responsibility to audit income allocation at the participant level. Often we have been able to combine a certification (at the plan level) with a SAS 70 (at the participant level). The DOL is simply stating that they have a new enforcement initiative. They have gone after timely remittance of employee deferrals (the plan is potentially "caught"). Now they are going after proper allocation of income (the auditor is potentially "caught"). This is simply a DOL enforcement initiative. Not a new policy about the "meaning" of certifications or SAS 70s. Let's be accurate about basic definitions -- and invoking big 4 policy makers doesn't change the core definition of a certification vs. a SAS 70. Let's be careful.... Barbara A. Beltrand, CPA Minnesota
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