Accounting error - affecting only owner

[Cynchbeast]

Due to bad information received from our client's accountant, we incorrectly included an insurance policy in the PSP trust accounting (and Schedule I) for 2011-2014. This policy was segregated from all other assets and was entirely part of the owner's account balance; NO OTHER PARTICIPANT WAS AFFECTED.

Rather than amending several years, we thought we could simply remove it from the plan's assets in 2015 by listing its value on Schedule I - probably as Other Expenses (line 2i). We would then include a "Schedule I - Other Attachment" with the filing, explaining the adjustment to correct for an accounting error and stress that this affected no one other than the owner.

Thoughts/comments please.

[Belgarath]

I'm guessing that this is a small (non audited) plan? If so, I'd personally vote for filing amended forms.

[Bird]

I have to ask why it is being removed from the tax return. It's an asset of the plan, isn't it?

[E as in ERISA]

I think that the signer gets to decide, not the preparer.

[Cynchbeast]

Thank you for responses. A couple comments in response to the replies:

1. Not, it is not an asset of the plan. Unbeknownst to us, the accountant was listing as trust assets both the cash value AND the surrender value of an annuity as though they were two separate assets (listing cash value as "Life Insurance". So for the years this was done, we carried the annuity in the trust accounting twice.
2. Of course this is ultimately up to the sponsor. But we are seeking some feedback so we can determine what we believe to be the best course to take. Let's face it - the sponsor doesn't know; he will just do what we say.

[Bird]

Ah, I see. I could go either way; the right thing is to file amended returns. If it's a matter of making the accountant look bad and then billing for the amended returns, well, as I like to say, they are just numbers on a piece of paper that will ultimately change some government statistical average by a penny. (Yes there are limits to that bad attitude.)