103(a)(3)(c) audit - Not all investments certified

[Taffy Auditor]

Hi - I have a new EBP audit where the predecessor completed 103(a)(3)(c)/limited-scope audit with only certain investments certified and then had a note breaking out certified vs non-certified investments and disclosed in the notes that they did full-scope procedures on those non-certified investments. The report reads that same as a limited-scope normally would but just references the 2 custodians that certified statements were received. The 5500 is marked as limited-scope.

I don't believe I've ever seen this and was wondering if anyone had and if this is even allowable to apply limited-scope procedures to certain investments and full-scope to others?

[Peter Gulia]

ERISA § 103(a)(3)(C) [29 U.S.C. § 1023(a)(3)(C)] and 29 C.F.R. § 2520.103-8 speak in terms of what an independent qualified public accountant’s examination and report “need not extend to[.]”

And the rule can apply not only if all, but also when only some, of the plan’s assets were “held by a bank or similar institution or insurance carrier[.]” 29 C.F.R. § 2520.103-8(b) https://www.ecfr.gov/current/title-29/subtitle-B/chapter-XXV/subchapter-C/part-2520/subpart-C/section-2520.103-8#p-2520.103-8(b).

The AICPA Auditing Standards Board’s Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA recognizes this:

SAS 136 ¶ 8: “When [the plan’s administrator] elects an ERISA [§] 103(a)(3)(C) audit, as discussed in paragraph 7, the audit need not extend to any statements or information related to assets held for investment of the plan (hereinafter referred to as investment information) by a bank or similar institution or an insurance carrier [if all § 103(a)(3)(C) conditions are met].”

SAS 136 ¶ 34: “Plans may hold investments in which only a portion are covered by a certification by a qualified institution. In that case, the auditor should perform audit procedures on the investment information that has not been certified.”

The implementation guidance and illustrations suggest an IQPA’s report might need notes to communicate clearly about which investment information was certified, and which was not.

[gabrielnm13]

Hi - would you mind sharing the name of the 5500 filing mentioned above? I am looking for some example wording of this exact scenario. 

 

Thanks!