Department of Labor to Conduct Employee Benefit Plan Audit Quality Assessment of 2020 Plan Year Filings

September 14, 2021

The U.S. Department of Labor (DOL) Employee Benefit Security Administration (EBSA) Office of the Chief Accountant (OCA) recently announced it is planning to conduct a study of employee benefit plan (EBP) audit quality based on 2020 filings of Form 5500, including calendar year 2020 filings filed on extension by Oct. 15, 2021.

The EBSA OCA is in the process of developing the sample methodology of plans and expects to make a sample selection later this year. Plan sponsors and firms will begin to be contacted in November regarding the required paperwork and documentation for submission if one of their EBP audits is selected for review. If selected, the firm will be asked to provide the EBSA OCA with a full set of audit workpapers supporting the audit containing all documentation, including workpapers kept in other related files, as the DOL will not permit supplemental submissions.

Auditors should be sure to have adequately documented their audits as a record of auditing procedures applied, evidence obtained, and conclusions reached by the auditor in the engagement. AU-C Section 230, Audit Documentation, states that audit documentation provides evidence of the auditor's basis for a conclusion about the achievement of the overall objectives of the auditor as well as evidence that the audit was planned and performed in accordance with generally accepted auditing standards (GAAS) and the applicable legal and regulatory requirements.

The AICPA Employee Benefit Plans Audit Quality Center has many tools and resources to help your firm perform and document quality EBP audits:

The DOL previously performed an audit quality assessment of the 2011 plan filing year and reviewed a sample of 400 audits. The 2011 study found nearly four out of 10 audits contained major deficiencies. The DOL referred audits with deficiencies to the applicable state board of accountancy and AICPA Ethics.

The 2020 plan filing year study is expected to last one year, with a report released in 2023.

For more information, read the alert from the AICPA.