Home / Articles / New Audit Standard for Employee Benefit Plans: What You Need to Know

New Audit Standard for Employee Benefit Plans: What You Need to Know

January 4, 2022


Share on email
Share on linkedin
Share on facebook
Share on twitter
Share on print

Benefit plans with a year ending on or after December 15, 2021, will need to follow a new auditing standard. Statement on Auditing Standard No. 136, Forming an Opinion and Reporting on Financial Statements of Employee benefit Plans Subject to ERISA, provides clarity over management and auditor responsibilities and additional transparency in reporting.

Updated Reporting

One of the more significant changes in the standard is the introduction of the ERISA Section 103(a)(c)(3) audit (previously referred to as a limited scope audit). Unlike a limited scope audit, which resulted in a disclaimer of opinion related to certified investment information, an ERISA Section 103(a)(c)(3) audit will provide a two-pronged opinion covering the audit and whether the certified investment information contained in the financial statements agrees to the certification. In addition, all ERISA audit reports [even if management does not elect an ERISA Section 103(a)(c)(3) audit] will have expanded wording relating to both auditor responsibilities and management responsibilities.

Additionally, auditors are now required to report, in writing, any “reportable findings” at the conclusion of the audit. Reportable findings can include identified instances of noncompliance or other areas the auditor determines significant or relevant to those charged with governance. Previously, auditors could have communicated less significant items verbally. As a result, management can expect to receive more written comments for their 2021 plan audit.

Updated Requirements for Plan Management

Expanded responsibilities for plan sponsors include:

  • Determining whether the plan audit qualifies for an ERISA Section 103(a)(c)(3) audit:
    • Are requirements met?
    • Is there a proper certification of investments?
  • Acknowledging management’s responsibility to:
    • Maintain a current plan instrument, including amendments
    • Administer the plan in accordance with plan provisions
    • Maintain sufficient records to determine participant benefits
    • Provide the auditor with a substantially completed draft Form 5500 prior to completing the audit

Updated Requirements for Plan Auditors

Expanded responsibilities for plan auditors include:

  • Performing engagement acceptance procedures—obtaining management’s acknowledgements as noted above and inquiring how management determined the plan qualified for an ERISA Section 103(a)(c)(3) audit
  • Evaluating management’s assessment of investment certification qualifications
  • Obtaining the most recent plan documents and design procedures necessary to assess whether the plan is following plan provisions
  • Reading the draft Form 5500 to identify any material inconsistencies to the audited ERISA plan financial statements and obtain revisions as necessary
  • Evaluating and communicating reportable findings in writing, with a description of the potential impact to the plan for each finding

Plan sponsors can find additional tools provided by the AICPA Employee Benefit Plan Audit Quality Center for more information.

Stay tuned: CSH will provide additional guidance in our next article on how to prepare for this new standard.


All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a Clark Schaefer Hackett professional. Clark Schaefer Hackett will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.


Related Articles


2 Min Read

Preparing for New Employee Benefit Plans Audit Standards


2 Min Read

Top Ten Strategies for End of Year Planning


2 Min Read

IRS announces adjustments to key retirement plan limits


2 Min Read

SECURE Act Provisions for Long-Term Part-Time Employees


2 Min Read

Six steps to a smooth Employee Benefit Plan (EBP) audit


2 Min Read

80-120 Rule: Do you Need a Retirement Plan Audit Infographic

Get in Touch.

What service are you looking for? We'll match you with an experienced advisor, who will help you find an effective and sustainable solution.
  • Hidden
  • This field is for validation purposes and should be left unchanged.