How independent do accountants have to be when auditing plan documents? The Department of Labor just got more specific.
“Under ERISA, plan administrators, subject to certain exceptions, are required to retain on behalf of all plan participants an independent qualified public accountant.”
On Friday, the DOL’s Employee Benefits Security Administration (EBSA) released Interpretive Bulletin 2022-01, which updates its guidance on the “independence” requirement for accountants who audit employee benefit plans under section 103(a)(3)(A) of the Employee Retirement Income Security Act.
The department issued an Interpretive Bulletin as far back as 1975 that set forth guidelines for determining when a qualified public accountant is independent for purposes of auditing and rendering an opinion on the financial statements required in the plan’s annual report, known as Form 5500 Annual Return/Report of Employee Benefit Plan.
The IB released Friday revises and restates the 1975 IB to remove certain outdated and unnecessarily restrictive provisions and to reorganize other provisions for clarity.
“Our goal in updating the Interpretive Bulletin is to make sure the Department of Labor’s interpretations in this area continue to foster proper auditor independence while also removing outdated and unnecessary barriers to plans accessing highly qualified auditors and audit firms,” Acting Assistant Secretary of Labor for Employee Benefits Security Ali Khawar said in a statement.
Under ERISA, plan administrators, subject to certain exceptions, are required to retain on behalf of all plan participants an “independent qualified public accountant” to conduct an annual examination of the plan’s financial statements in accordance with generally accepted auditing standards.
The accountant also must render an opinion as to whether the financial statements are presented fairly in conformity with generally accepted accounting principles and whether the schedules required to be included in the plan’s annual report present fairly and, in all material, respects the information contained therein when considered in conjunction with the financial statements taken as a whole.