Because of an 11-K filing will an audit be required?

[Guest JDansa]

My client was told that they did not need an audit by an independent qualified public accountant because they had less than 100 participants. Then, the client was told that because they are filing a Form 11-K with SEC an audit might be necessary. I looked at the Form 11-K and it states that "plans subject to ERISA may file plan financial statements and schedules prepared in accordance with the financial reporting requirements of ERISA. To the extent required by ERISA, the plan financial statements shall be examined by an independent accountant, except that the "limited scope exemption" contained in Section 103(a)(3)© of ERISA shall not be available."

Does this mean that because ERISA does not require the plan to be audited for annual reporting purposes, the Plan does not need to submit audited financial statements with their 11-K filing? Granted it will still have to submit financial information, but no audit opinion is necessary.

Has anyone dealt with this situation before? Any thoughts? Opinions? Advice?

Thank you!

[Kirk Maldonado]

Your client needs to hire a competent ERISA attorney who also understands securities laws.

[RCK]

I agree that the client needs help, but think that the (external) corporate auditor should be able to answer the quesiton.

I could provide anecdotal information about what we do with our plans (some with full scope audits, some with limited scope, and some with none), but that seems dangerous in this situation.

RCK

[E as in ERISA]

That sounds like unauthorized practice of law to me.....

[Guest svatty]

although i agree with Kirk re: obtaining competent legal help .... it also might help to point your attorney / auditor toward instruction 4 under required information in the Form 11-K

Form 11-K

[BeckyMiller]

I agree with the need to contact counsel. BUT, when you contact counsel, I would draw their attention to the SEC release that was associated with the revision to the filing requirements in 1990. It is SEC release 33-6867. I have found the language in the discussion section of the release much more helpful than the filing instructions or the regulations in interpreting what they apparently meant.

[Kirk Maldonado]

I think that there is a bigger issue here than whether an audit is required for the Form 11-K.

If your ERISA/securities counsel doesn't know the answer to this question, I would be very concerned about the quality of advice that you have been getting from that person. This is not a terribly sophisticated issue.