Anyone know of any authority or licensing standards that would require

[AndyH]

Anyone know of any authority or licensing standards that would require an auditor to provide a TPA with their EIN for purposes of Schedule H item 3(d) (other than common sense)?

I have a filing that may be late or incomplete for this reason. The auditor currently will not provide the EIN because the audit may not be completed by 10/16, and they don't want their EIN on a filing of a 5500 without an audit.

Bizarre but true. I suspect this will get resolved, or we will find another source for this information, but it would be helpful if there is some authority to cite as a reason why they must provide this now.

[Guest PAUL DUGAN]

My first reaction would to be recommend

a new auditor, may be to late for this

year.

But to give you a suggestion I recomend that

you try a source such as freeerisa.com.

assuming that the CPA has a qualifed

plan their 5500 will have a EIN number.

[AndyH]

Thank you for your comments, Paul. I couldn't agree more, but I'd like to take the high road for now. This is a takeover (our first year), the long-standing auditor is a big 8/6/whatever (do seperate offices have separate EIN's?), and due to the 5500 software problems and other legitimate causes of lateness, everyone is stressed.

My preference (for now) would be to politely point out why that response is unacceptable due to specific ethical or professions requirements. We can breathe fire later when the time is right, hopefully with some specific ammunition.

Freeerisa.com is a helpful suggestion for a search. I'm sure with some effort I can get the EIN from some source, but the point remains that this position must be in violation of something.

[KIP KRAUS]

I just realized that I filed two 401(k) plans and did not put the auditor's EIN on either filing. Oh well, I guess we'll see what the DOL comes back with. I don't really see it as a major problem.

The question I have is Why does the DOL need this information?

As to your situation, I'd file and let the DOL know that the auditor would not provide the EIN. I wouldn't bust my but trying to find it.

[BeckyMiller]

If this is the client's regular auditing firm, they should have been sending them a Form 1099 in the past for their payments of audit fees, etc. (Most auditing firms are partnerships, so the 1099's are still required.) I would check there.

[JohnCheek]

>>>The question I have is Why does the DOL need this information?

After more than ten years of looking at the quality of audits, DOL concluded that some firms do better work than others. DOL's plan to force better work: require the auditor's EIN on the 5500.

Think about it; if DOL had the ability to pull ALL of your clients at once, and could impose massive penalties on ALL of them, based on your failure to include all required footnotes (for exemple), do you think you might work harder at getting the audit right?

With regard to the missing EIN, if the 5500 goes in without the audit report, it's already incomplete, and the missing EIN won't make matters worse. I would file NOW with an explantion that the audit has not yet been completed. Then, as soon as possible, I would file an amended report including the audit report and EIN.

[KIP KRAUS]

JohnCreek:

With all due respect to the DOL and CPAs, I fail to see what business it is of the DOL to force auditing firms to do better audits. If a Plan is being operated within the limits of the law, the DOL has no business sticking their noses into an auditing firms business. By the way, if they recieve the audited reports with the 5500, they know who the audit firm is. This is just another example of uncle sugar lengthining the arm of government. Just my opinion, but then I'm only a tax payer.

I would like someone to point me in the direction of cases where 5500 reports were rejected because of the auditor's report. I would really like to be informed.

[JohnCheek]

Kip:

EVERY case I've seen where the DOL rejected a 5500 was due to inadequacies and errors in the audited financial statements.

The most expensive: a finacial statement and opinion addressed the Trust, not the Plan, and, by the way, DOL decided it was two plans, not one; DOL rejected 7 years of filings and proposed penalties of $1.3 million.

Next: an accountant's report omitted the word "independent" in its title; also, a few footnotes were missing, such as the termination of plan note, etc. And again, DOL felt there were two plans, not one; in this case, however, DOL felt one of the two was a pension, and the other was a welfare. Since the trustees insisted this was one plan, a welfare plan, most footnotes were welfare plan notes; DOL cited some missing "pension-type" notes as another reason for rejection. Also the 5500 used plan number 501, when pension plans must start at 001. Proposed penalty for "two" plans, with 5 years rejected, $900,000.

Another rejection: a welfare plan missing as few footnotes, and the accountant's report did not address the supplemental schedules. Penalty: waived, once corrected financials were submitted.

Does DOL have the authority to poke around the accountant's work? Yup. ERISA specifies what must be included in the financial disclosures, and gives DOL authority to reject incomplete filings. If the accountant does not comply with ERISA disclosure requirements and generally accepted accounting principles, expect to hear from DOL.

Why is DOL so interested? DOL only has about 450 investigators to ride herd on about 5 million plans; it has to rely on auditors do do what the law and professional standards say they are doing.

[Kristina]

Just an FYI. In talking with a DOL person regarding the edit checks on the 5500's (The edit checks which were not shared with any software developer.) I was told that there were 30 edit checks on the Schedule H which tie to the audit report itself. It is very important that the Sch H and the Audit Report must match exactly, or that there is a footnote pertaining to any discrepancy in the Audit Report.

[KIP KRAUS]

JohnCheek:

Very interesting. I think most people know that ERISA was the Accountants, Actuaries and Attorneys relief Act of 1976. ERISA gives very liberal and broad, and even in some respects specific authority to the DOL and other agencies of the government. However, the examples you site seem to be clear examples of total incompetence on the part of the people who designed, funded, administered and audited the plans. Or could it be that the rules and regulations for establishing pension and welfare plans are so convoluted that these kinds of mistakes can be made? There must be more to your examples than meets the eye.

I don’t question ERISA’s authority to grant certain powers to the DOL. I guess my question was more rhetorical. I always thought that accountants were governed by the Accounting Standards Board. Is this board governed by the DOL, or am I totally wrong about the ASB?

[JohnCheek]

In theory, accounting standards are set by the private sector, by the Financial Accounting Standards Board (FASB), with other entities getting involved in some areas (GASB sets govt. accounting standards, etc). In practice, the SEC, DOL, various state regulatory agencies, and even Congress, periodically threaten to impose standards.

The accounting and auditing standards, as well as specific ERISA reporting standards, are not difficult. There are enough resources that any CPA should be able to meet the requirements, IF they are willing to devote the time to use the resources. That, however, is the problem: accountants who only audit one or two plans are less likely to spend the time to really understand how employee benefit plan audits are unique, and therefore they are much more likely to submit financial statements that do not comply with professional standards and DOL requirements.

[Greg Judd]

Originally posted by KIP KRAUS

JohnCheek: I always thought that accountants were governed by the Accounting Standards Board.  Is this board governed by the DOL, or am I totally wrong about the ASB?

There you go again, Kip!

This is the kind of thread that makes Dave's little coffee shop the place it is (can't be the coffee...)!

[KIP KRAUS]

I just can't resist it.