EBPAQC 403(b) Plan Audits Live Forum

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EBPAQC 403(b) Plan Audits Live Forum

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• EBPAQC Live Forum
• 403(b) Plan Audits
• Update
• June 10, 2010 

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Panelists

• Marilee Lau
• Marilee Lau CPA
• Bob Lavenberg
• BDO Seidman LLP
• Debbie Smith
• Grant Thornton LLP

• Tim Desmond
• OConnor Davies Munns Dobbins LLP
• Lynne McMennamin
• McGladrey Pullen LLP

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CPE Credit For Participating

• Must have registered for CPE credit prior to this
  live forum
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  ALL_ _ _ _ ) and 4 polling questions during the
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Introduction

• Marilee Lau, CPA
• Chair
• EBPAQC Executive Committee

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Objectives

• Available 403(b) plan audit resources
• General considerations- client acceptance, fees,
  opening balances, etc.
• Impact of reporting relief in DOL Field
  Assistance Bulletins 2009-02 and 2010-01
• Impact of DOL Advisory Opinion 2010-10A on
  reporting certain insurance contracts
• Initial audit considerations- engagement letter,
  special audit considerations
• Financial statements and disclosures
• Audit reports
• SAS 115 communications
• AICPA FAQs on 403(b) Plan Audits
• Questions and answers

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403(b) Plan Audit Resources

• Previous EBPAQC 403(b) Plan Audits Live Forum-
  November 6, 2008
• basic understanding of 403(b) plans
• similarities to and differences from 401(k) plans
  
• which plans are ERISA-covered
• new DOL reporting and audit requirements
• implementation issues
• initial steps to take
• EBPAQC members can listen to the archived event
  and view the presentation materials at the EBPAQC
  web site.

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403(b) Plan Audit Resources

• EBPAQC 403(b) Plan Audit Resource Center
• On the EBPAQC web site
• 403(b) Plans Primer
• 403(b) Filing and Audit Requirements
• 403(b) Getting Started Meeting the New Form 5500
  Reporting and Audit Requirements
• 403(b) Questions to Expect from Your Plan Auditor
• 403(b) Sample Auditor Request List for Plan
  Information
• 403(b) Retirement Plan Audits-Frequently Asked
  Questions
• Share these with your plan clients!

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403(b) Plan Audit Resources

• AICPA Audit Risk Alert Employee Benefit Plans
  Industry Developments 2010 (Audit Risk Alert)
• overview of 403(b) plans
• pertinent Internal Revenue Service (IRS)
  regulations
• Department of Labor's (DOL) Field Assistance
  Bulletins related to 403(b) enforcement relief
• significant differences between 401(k) plans and
  403(b) plans
• client acceptance and continuance
• engagement letter
• initial audit considerations
• example audit reports
• Available at AICPA Store at CPA2Biz.com

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403(b) Plan Audit Resources

• U. S. Department of Labor
• DOL EBSA 403(b) Website- http//www.dol.gov/ebsa/
  403b.html
• Employee Benefit Security Administration's (EBSA)
  toll-free Form 5500 help desk is available from
  800 am to 800 pm, Eastern Time, at
  1-866-GO-EFAST (866-463-3278)
• Questions concerning the information contained in
  the Field Assistance Bulletins may be directed to
  the DOL's Division of Coverage, Reporting and
  Disclosure at 202-693-8523
• Questions concerning individual plans facing
  specific transition issues should be directed to
  EBSA's Office of the Chief Accountant at
  202-693-8360

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403(b) Plan Audit Resources

• Internal Revenue Services (IRS)
• IRS Web site on IRC 403(b) Tax-Sheltered Annuity
  Plans at http//www.irs.gov/retirement/article/0,,
  id172430,00.html
• IRS Publication 571 Tax-Sheltered Annuity Plans
  (403(b) Plans) (Rev. November 2007) Cat. No.
  46581C http//www.irs.gov/pub/irs-pdf/p571.pdf
  Other IRS Publications
• Pub. 4482, 403(b) Tax-Sheltered Annuity for
  Participants
• Pub. 4483, 403(b) Tax-Sheltered Annuity Plan for
  Sponsor
• Pub. 4484, Choose a retirement plan for employees
  of tax-exempt and government entities (schools,
  hospitals, churches, charities)
• Pub. 4530, Designated Roth Accounts under a
  401(k) or 403(b) Plan
• Pub. 4546, 403(b) Plan Checklist
• Pub. 4547, Have you had your check-up this year?
  for 403(b) Retirement Plans

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General Considerations and DOL Reporting Relief

• Bob Lavenberg, CPA
• Partner
• BDO Seidman LLP
• Chair
• AICPA 403(b) Plan Audit Joint Task Force

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403(b) Plan Environment

• Universal availability
• Vendors
• Custodial accounts
• 90-24 transfer
• Excludable contracts

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Considerations Relating to Client Acceptance,
Fees, Opening Balances

• History of Plan
• Age of Plan
• Organizational Factors
• Tone at the top
• Attitude towards compliance
• Internal controls
• Historical records
• Vendors and vendor selection
• Dedicated staff not just how many but who
• Budget internal external
• Understanding/attitude about audit opinion

• Vendors
• How many now
• Any others in the past
• Internal controls
• Historical records
• 90-24 transfers

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Field Assistance Bulletin (FAB) 2009-02

• DOL FAB 2009-02 allows the plan administrator to
  exclude certain pre-January 1, 2009 annuity
  contracts and custodial accounts for ERISA
  reporting purposes. Must meet all of these
  criteria
• the contract or account was issued to a current
  or former employee before January 1, 2009
• the employer ceased to have any obligation to
  make contributions (including employee salary
  reduction contributions), and in fact ceased
  making contributions to the contract or account
  before January 1, 2009
• all of the rights and benefits under the contract
  or account are legally enforceable against the
  insurer or custodian by the individual owner of
  the contract or account without any involvement
  by the employer and
• the individual owner of the contract is fully
  vested in the contract or account.

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FAB 2009-02 (CONT)

• The plan sponsor will need to ensure that the
  four criteria have been met in order for them to
  be properly excluded
• The FAB allows but does not require that
  contracts and/or accounts be excluded
• Contracts/accounts that do not meet all of the
  four criteria may not be excluded
• Contracts/accounts that are excludable under the
  FAB may also be excluded from the comparative
  (2008) financial statements included in the 2009
  Form 5500

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FAB 2009-02 (CONT)

• DOLs expectation is for a good faith effort to
  comply with the ERISA annual reporting
  requirements
• Some vendors will not be in a position to exclude
  contract or account information that meets the
  criteria
• The FAB applies to both large and small plans
• The FAB also applies to years beyond 2009
• Current or former employees with contracts
  excludable under this relief are not counted as
  participants
• Note This does not change the IRSs Universal
  Availability Rule

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FAB 2009-02- Auditor considerations

• If plan sponsor elects to exclude certain
  pre-2009 contracts or accounts
• Need to consider
• Effect on completeness of the financial statement
  presentation
• Effect of restrictions on the scope of the audit
• Some sponsors may not find a qualified,
  adverse or disclaimer of opinion
  acceptable

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FAB 2009-02- Auditor considerations

• Will likely have to issue a modified audit report
• Scope limitation
• GAAP departure
• Or both!
• DOL will not reject a 403(b) plan Form 5500 on
  the basis of a qualified, adverse or disclaimed
  opinion if the accountant expressly states that
  the sole reason for such an opinion was because
  such pre-2009 contracts and accounts were not
  covered by the audit or included in the plans
  financial statements

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FAB 2009-02- Auditor considerations

• ERISA and DOL regulations require the audit to be
  performed in accordance with Generally Accepted
  Auditing Standards (GAAS) requiring all plan
  assets to be reported
• Need to audit the information that is available
• Cannot limit test work because of a scope
  limitation or because a modified report
  (disclaimer, adverse, etc.) will be issued
• Regardless of the type of opinion issued,
• the auditor is still required to complete all
  other GAAS audit procedures (e.g.- contributions,
  distributions, etc.)

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FAB 2010-01, Annual Reporting and ERISA
Coverage for 403(b) Plans

• Issued February 17, 2010
• Provides additional guidance in a Frequently
  Asked Questions (FAQ) format
• Confirms that if, as a result of applying FAB
  2009-02, the number of eligible participants is
  below 100, then the plan becomes a small filer
• Affirmed that the limited scope exemption is
  available, but make sure that all requirements
  are met and that properly certified statements
  are obtained from all vendors
• Acknowledged that the inability of the auditors
  to obtain sufficient evidence is a restriction on
  scope of audit, and opinion may be modified
  accordingly

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FAB 2010-01 (CONT)

• States that if, as part of the audit the auditor
  was engaged to perform, the auditor discovers
  that contracts were incorrectly excluded under
  DOL FAB 2009-02 from the plans financial
  statements, the DOL expects that the auditor will
  alert the plan administrator.
• Plan administrators have an obligation to take
  reasonable steps to resolve questions concerning
  the exclusion of such contracts in their annual
  report.
• If the plan administrator and auditor do not
  agree with how to resolve issues relating to
  excluded contracts, the DOL expects these issues
  to be noted in the audit report.

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DOL Advisory Opinion and Initial Audit
Considerations

• Debbie Smith, CPA
• Partner
• Grant Thornton LLP

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DOL Advisory Opinion (AO) 2010-10A

• Issued March 4, 2010- Addresses Traditional
  Annuities issued by TIAA-CREF
• Allocated vs. Unallocated insurance contracts?
• DOL concluded the contracts are UNALLOCATED
• For plan years beginning on or after 1/1/09 must
  be reported as plan assets on the Form 5500
• DOL will not reject (or require amended) Form
  5500 for plan years ending in 2008 or prior which
  contain a modified opinion due to exclusion of
  these contracts from plan assets
• What about similar contracts with other insurance
  companies?

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DOL Advisory Opinion (AO) 2010-10A-Audit/5500
Considerations

• Depends on facts and circumstances
• Financial Statements
• Could be an error
• May require restatement of financial statements
• Modified opinion
• Reconciliation to the 5500
• Form 5500
• Will not have to restate or amend
• Treat the contracts as a transfer in for the 2009
  Schedule H

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Allocated ContractsEmerging Technical Issues

• FASB Definition (FASB Codification Master
  Glossary)-
• A contract in which an insurance entity
  unconditionally undertakes a legal obligation to
  provide specified pension benefits to specific
  individuals in return for a fixed consideration
  or premium. An annuity contract is irrevocable
  and involves the transfer of significant risk
  from the employer to the insurance entity.
• Allocatednot recognized as a plan asset
  Unallocatedrecognized as a plan asset
• Read insurance contracts and supporting
  documentation to determine appropriate
  classification of the contract

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Initial Audit Considerations

• Engagement letter
• Scope of services
• Any client-imposed scope restrictions?
• Excluded contracts per DOL FAB?
• Limited scope audit under 29 CFR 2520.103-8?
• Auditor responsibility for prior year
  (comparative) statement of net assets available
  for benefits?
• Audit, review, compilation?

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Initial Audit Considerations

• Make inquires of the plan administrator and
  outside service providers, as applicable,
  regarding the plans operations during those
  earlier years
• Obtain relevant information (for example, plan
  and /or participant level statements,
  recordkeeping reports, reconciliations, minutes
  of meetings, and SAS No. 70 reports) for earlier
  years, as applicable, to determine whether any
  errors were noted during those years that could
  have a material effect on current year balances
• Gain an understanding of the accounting practices
  that were followed in prior years to determine
  that they have been consistently applied in the
  current year

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Initial Audit Considerations- Comparative
Statements of Net Assets

• Comparative statements of net assets available
  for benefits required by ERISA
• Apply procedures that are practicable and
  reasonable in the circumstances to obtain
  assurance that the accounting principles used by
  the plan in the current and the preceding year
  are consistent
• See paragraphs .24.25 of AU section 420,
  Consistency of Application of Generally Accepted
  Accounting Principles (AICPA, Professional
  Standards, vol. 1), for further guidance

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Initial Audit Considerations-Risk Assessment
Procedures

• Need to perform procedures over the completeness
  and accuracy of participant level information
• Assets are not held in trust but in individual
  annuity contracts or custodial accounts rather
  than in the plans name
• Risk assessment may need to consider condition of
  records and internal controls over multiple
  vendors
• Planning the nature, timing, and extent of
  further audit procedures depends on the outcome
  of the auditors risk assessment procedures.
• See paragraph .42 of the 2010 EBP Audit Risk
  Alert

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Initial Audit Considerations-Areas of Special
Consideration

• Completeness of participant data and records
• Participant eligibility
• Amounts and types of benefits
• Eligibility for benefits
• Account balances
• The nature, timing, and extent of auditing
  procedures applied by the auditor are a matter of
  judgment and will vary with factors such as the
  adequacy of past records, the significance of
  beginning balances, the complexity of the plan's
  operations, and controls covered by SAS No. 70
  reports.
• See paragraph 5.90 of AICPA Audit and Accounting
  Guide Employee Benefit Plans

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Numerous Audit Risk Factors

• Size of plan and number of years in existence
• Adequacy and organization of critical plan
  documents
• Incomplete or missing records (participant data,
  payroll, etc.)
• Disaggregation and completeness of recordkeeping
  information
• Identifying all current and former participant
  accounts to be included as plan assets
• Missing participants
• Orphan contracts

• Multiple service provider concerns
• Adequacy of internal controls
• Fiduciary oversight
• Availability of SAS No. 70 reports
• Monitoring controls
• Regulatory compliance matters
• Investment valuation and reporting
• Fraud risks

See paragraph .42 of the 2010 AICPA EBP Audit
Risk Alert
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Typical Compliance Issues

• Late deposit of participant deferrals loan
  repayments
• Failure to properly apply plans definition of
  compensation
• Failure to update plan document
• Failure to follow plans eligibility provisions
• Incorrect employer contributions
• Failure to properly apply plans vesting
  provisions
• Improper use of plan forfeitures
• Failure to comply with Form 5500 filing
  requirements

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Financial Statements and Disclosures

• Tim Desmond, Partner
• OConnor Davies
• Munns Dobbins

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403(b) Financial Statements and Disclosures

• 403(b) plans are considered a type of defined
  contribution plan.
• 2010 EBP Audit Risk Alert notes that the
  financial statements and disclosures would be
  similar to those described in chapter 3 (and
  appendix E) of the AICPA Audit and Accounting
  Guide Employee Benefit Plans.
• Comparative Statement of Net Assets Available for
  Benefits (2009/2008)
• Current year Statement of Changes in Net Assets
  Available for Benefits
• Similar disclosures as for a 401(k) plan

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403(b) Financial Statements and Disclosures

• 403(b) plans would make all of the appropriate
  footnote disclosures that apply to 401(k) plans
  (e.g.- FASB ASC 820 investment fair values,
  insurance contracts, etc.)
• Consideration should be given concerning which
  disclosures may need to be modified or added.
• For example, the general description of the plan,
  eligibility requirements, funding, and tax status
  should reflect the requirements of the 403(b)
  plan document.
• Note The IRS has not yet established a process
  for issuing determination and opinion letters for
  403(b) plans
• Additional or modified disclosures of the
  accounting policies surrounding the accounting
  treatment of certain contracts under DOL FAB
  2009-02 may be necessary

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403(b) Financial Statements and Disclosures

• Loans to participants vs. Participant loans
• Loans to participants are made by the vendor and
  are secured by the participants individual
  account balance (plan assets)
• Participant loans are made by the plan
• Loans to participants are not currently on the
  plans financial statements or the Form 5500
• Need to consider additional disclosure in the
  footnotes of collateralized plan assets
• DOL is considering additional guidance
• Stay tuned!

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Auditor Reports

• Marilee Lau, CPA

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Auditor Reports

• What type of audit report will be issued?
• Depends on the auditors professional judgment
• Whether sufficient appropriate audit evidence has
  been obtained to form an opinion
• Could be unqualified, qualified, adverse or
  disclaimer of opinion
• Authoritative guidance
• AU section 508, Reports on Audited Financial
  Statements
• AU Section 551, Reporting on Information
  Accompanying the Basic Financial Statements in
  Auditor-Submitted Documents

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Auditor Reports

• Many reports will be disclaimers
• Not limited-scope disclaimers as permitted by 29
  CFR 2520.103.8
• Real disclaimers
• Concerns over completeness of reported
  information
• Can excluded contracts that are excludable
  under the FAB be quantified?
• Are the excludable contracts material to the
  financial statements
• Not auditing their good faith effort
• Other anticipated scope restrictions (records
  issues, certified investment information, etc.)

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Auditor Reports

• The limited scope audit opinion allowed by the
  DOL under 29 CFR 2520.103-8 may not be
  appropriate
• Opinion on the supplemental schedules would be
  the same opinion as for the reportreference to
  compliance with the DOLs rules and regulations
  as to form and content would not be appropriate

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Auditor Reports

• Fact Pattern 1
• The plan administrator is not able to determine
  the amount or materiality of the excluded assets
  due to the lack of records
• Disclaimer of opinion
• Example opinions based on specific fact patterns
  when contracts or accounts are excluded as
  permitted by DOL FAB 2009-2

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Illustrative Auditor Report- Fact Pattern 1-
Disclaimer of Opinion
Excerpts second, third and fourth
paragraphs The Plan has not maintained
sufficient accounting records and supporting
documents relating to certain annuity and
custodial accounts issued to current and former
employees prior to January 1, 2009. Accordingly,
we were unable to apply auditing procedures
sufficiently to determine the extent to which the
financial statements may have been affected by
these conditions. As described in Note X, the
Plan has excluded from investments in the
accompanying statement of net assets available
for benefits certain annuity and custodial
accounts issued to current and former employees
prior to January 1, 2009, as permitted by the
Department of Labor's Field Assistance Bulletin
No. 2009-02, Annual Reporting Requirements for
403(b) Plans. The investment income and
distributions related to such accounts have also
been excluded in the accompanying statement of
changes in net assets available for benefits. The
amount of these excluded annuity and custodial
accounts and the related income and distributions
are not determinable. Accounting principles
generally accepted in the United States of
America require that these accounts and the
related income and distributions be included in
the accompanying financial statements. Since we
were not able to apply auditing procedures to
satisfy ourselves as to the appropriateness and
completeness of the Plan's net assets available
for benefits and changes in net assets available
for benefits as of December 31, 2009 and 2008,
and for the year ended December 31, 2009, the
scope of our work was not sufficient to enable us
to express, and we do not express, an opinion on
these accompanying financial statements Source-
2010 AICPA EBP Audit Risk Alert.
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Auditor Reports

• Fact Pattern 2
• Plan administrator has elected the limited scope
  audit exemption and has also elected to exclude
  certain contracts and accounts. The amounts of
  the excluded contracts or accounts are
  determinable and are material.
• Disclaimer of opinion
• Example opinions based on specific fact patterns
  when contracts or accounts are excluded as
  permitted by DOL FAB 2009-2

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Illustrative Auditor Report- Fact Pattern 2-
Limited Scope Disclaimer of Opinion
Excerpts second, third and fourth
paragraphs As permitted by 29 CFR 2520.103-8 of
the Department of Labor's Rules and Regulations
for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974, the plan
administrator instructed us not to perform, and
we did not perform, any auditing procedures with
respect to the information summarized in Note X,
which was certified by ABC Bank, the trustee (or
custodian) of the Plan, except for comparing such
information with the related information included
in the financial statements and supplemental
schedules. We have been informed by the plan
administrator that the trustee (or custodian)
holds the Plan's investment assets and executes
investment transactions. The plan administrator
has obtained a certification from the trustee (or
custodian) as of December 31, 2009 and 2008 and
for the year ended December 31, 2009, that the
information provided to the plan administrator by
the trustee (or custodian) is complete and
accurate. As described in Note X, the Plan has
excluded from investments in the accompanying
statement of net assets available for benefits
certain annuity and custodial accounts issued to
current and former employees prior to January 1,
2009, as permitted by the Department of Labor's
Field Assistance Bulletin No. 2009-02, Annual
Reporting Requirements for 403(b) Plans. If the
identified contracts, as reported by the
custodian, were included, net assets available
for benefits would increase by approximately XX
and XX as of December 31, 2009 and 2008,
respectively. Further investment income of
approximately XX and distributions of
approximately XX related to such accounts, as
identified by the custodian, have also been
excluded in the accompanying statement of changes
in net assets available for benefits for the year
ended December 31, 2009. Accounting principles
generally accepted in the United States of
America require that these accounts and the
related income and distributions be included in
the accompanying financial statements. Because
of the significance of the information that we
did not audit, the scope of our work was not
sufficient to enable us to express, and we do not
express, an opinion on the accompanying financial
statements and supplemental schedules taken as a
whole. Source- 2010 AICPA EBP Audit Risk Alert.
46
Auditor Reports

• Fact Pattern 3
• Amounts of excluded assets are determinable and
  material to the financial statements
• Adverse opinion
• Example opinions based on specific fact patterns
  when contracts or accounts are excluded as
  permitted by DOL FAB 2009-2

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Illustrative Auditor Report- Fact Pattern 3-
Adverse Opinion
Excerpts third and fourth paragraphs As
described in Note X, the Plan has excluded from
investments in the accompanying statement of net
assets available for benefits certain annuity and
custodial accounts issued to current and former
employees prior to January 1, 2009, as permitted
by the Department of Labor's Field Assistance
Bulletin No. 2009-02, Annual Reporting
Requirements for 403(b) Plans. If the identified
contracts, as reported by the custodian, were
included, net assets available for benefits would
increase by approximately XX and XX as of
December 31, 2009 and 2008, respectively. Further
investment income of approximately XX and
distributions of approximately XX related to
such accounts, as identified by the custodian
have also been excluded in the accompanying
statement of changes in net assets available for
benefits for the year ended December 31, 2009.
Accounting principles generally accepted in the
United States of America require that these
accounts and the related income and distributions
be included in the accompanying financial
statements. In our opinion, because of the
effects of the matters discussed in the preceding
paragraph, the financial statements referred to
above do not present fairly, in conformity with
accounting principles generally accepted in the
United States of America, the net assets
available for benefits of the Plan as of December
31, 2009 and 2008, and the changes in its net
assets available for benefits for the year ended
December 31, 2009. Source- 2010 AICPA EBP Audit
Risk Alert.
48
SAS 115 Communications and AICPA 403(b) Plan
Audit FAQs

• Lynne McMennamin
• McGladrey Pullen, LLP

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SAS 115 Communications

• Material weaknesses and significant deficiencies?
• Oversight of the financial reporting process
• Internal control over financial statement
  preparation and review
• Financial statement knowledge
• Missing records
• Monitoring active/inactive accounts

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AICPA 403(b) Retirement Plan Audits- Frequently
Asked Questions (FAQs)

• 12 FAQs issued in March 2010 (EBPAQC EAlert
  200)
• FAQs emphasize that ERISA requires plan auditors
  to follow professional standards and report on
  whether the plan's financial statements are
  consistent with generally accepted accounting
  principles (GAAP), even though the DOL
  enforcement relief allows plans to exclude
  contracts and accounts that meet the FAB criteria
• FAQs also discuss
• client-imposed audit scope restrictions
• initial audit procedures on beginning of year
  balances
• audit procedures applied to comparative
  statements of net assets available for benefits
• insufficient historical records
• audit report modifications
• plan investment fair value measurement

51
AICPA 403(b) Retirement Plan Audits- Frequently
Asked Questions (FAQs)

• FAQs should be considered in light of the
  particular facts and circumstance of each plan
• Several factors can affect the scope of the
  audit, audit procedures performed, and the form
  of the auditors report, including, but not
  limited to
• whether the plan administrator excludes contracts
  and accounts from the plans financial statements
  that meet the requirements of FAB 2009-02,
• whether the plan administrator elects the limited
  scope audit exemption in accordance with ERISA,
• whether historical records exist and are
  available for reported contracts and accounts,
  and
• whether the plan has one or multiple vendors
  during the existence of the plan.

52
403(b) Retirement Plan Audits- Frequently Asked
Questions (FAQs)

•  1. Does the DOL enforcement relief change the
  requirement to have an independent audit of the
  plans financial statements?
• 2. Does the DOL enforcement relief change the
  auditors responsibility to perform a financial
  statement audit?
• 3. Can the plan administrator of a 403(b) plan
  elect the limited scope audit exemption in
  accordance with DOL regulation 29 CFR 2520.103-8?
  
• 4. If the plan administrator excludes some
  contracts or accounts from the plans financial
  statements that meet the requirements of FAB
  2009-02, and the plan administrator elects the
  limited scope audit exemption as permitted by DOL
  regulation 29 CFR 2520.103-8, what is the impact
  on the auditors report?
• 5. Generally, what initial audit procedures would
  the auditor perform on the beginning of year
  (e.g. January 1, 2009) contract and accounts?
• 6. What procedures does the auditor need to apply
  to the comparative statements of net assets
  available for benefits?

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403(b) Retirement Plan Audits- Frequently Asked
Questions (FAQs)

• 7. What if historical records do not exist or are
  not available for reported contracts and
  accounts?
• 8. If the plan receives a modified auditors
  report in the first year, will the auditor be
  able to issue an unqualified opinion in
  subsequent years?
• 9. If the plan administrator excludes some
  contracts or accounts from the plans financial
  statements that meet the requirements of FAB
  2009-02, or if the plan has inadequate historical
  records for reported contracts and accounts, what
  impact will these circumstances have on the
  auditors communications with those charged with
  plan governance?
• 10. Are there financial statement disclosure
  requirements if the plan administrator excludes
  contracts or accounts from the plans financial
  statements that meet the requirements of FAB
  2009-02?
• 11. Who is responsible for determining the value
  of plan investments?
• 12. What if fair value of investments is not or
  cannot be estimated?

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Question Answer Session
55
Question 1
A sponsor cannot determine if their 403(b) plan
is ERISA covered or how many plans they have?
What should the auditor do?
56
Question 2
A vendor has indicated that they can provide
historical information on a participant level
basis but not the plan level. What can be done?
57
Question 3
How far does the auditor need to go back in
testing beginning participant balances in an
initial 403(b) audit ?
58
Question 4
If contracts excluded in year 1 and a disclaimer
issued, wouldnt a disclaimer opinion be required
in all future years as they are always excluded
in the carried forward beginning year balance?
59
Question 5
The client has indicated that they find an
adverse or disclaimer opinion unacceptable and
ask what they can do to obtain a clean opinion.
What can the auditor do?
60
Question 6
Can the plan instruct the auditor to perform a
limited scope audit (section 103-8 disclaimer) of
the comparative 2008 plan year balances? Are
there any special considerations (certification,
etc.)?
61
Question 7
When auditing beginning balances, what should the
auditor do if the client has missing records
(e.g., they only maintained payroll records going
back 6 or 7 years)?
62
Question 8
What is the auditors responsibility to test for
delinquent contributions in prior years?
63
Question 9
Most 403(b) plan sponsors dont participate in
any meaningful way in the benefit payment
process. Could you please comment on where this
would land on the SAS 115 communication?
64
Question Answer Session
65
AICPA 403(b) Plan Audit Training

• ERISA 403(b) Audit Issues
• 100 minute audio course based on the highly rated
  session from the AICPA National Conference on
  Employee Benefit Plans.
• 403(b) Plans -- DOL and IRS Compliance
• 100 minute audio course is based on the highly
  rated session from the AICPA National Conference
  on Employee Benefit Plans.
• Best of AICPA National Conference on Employee
  Benefit Plans 403(b) Update
• 300 minute Conference On-Demand is a collection
  of conference highlights
• Coming soon! Audits of 403(b) Plans A
  Challenging New Audit Area
• (Text Available June 15, 2010 DVD/Manual and
  On-Demand format available July 5, 2010)
• Available at AICPA Store at CPA2Biz.com

66
Coming Events Mark Your Calendars!

• Future EBPAQC Live Forum webinar
• Insurance Contracts- July 21, 2010
• Upcoming AICPA Conferences
• December 13-14, 2010, EBP Accounting, Auditing
  and Regulatory Update, Omni Shoreham Hotel,
  Washington, DC
• May 2-4 2011, National Conference on Employee
  Benefit Plans, Aria, Las Vegas, NV

67
Wrap Up

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68
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