Request for Example SAS 112 Communications
Appendix B of the AICPA Audit Risk Alert, Employee Benefit Plans Industry Developments–2007 contains examples of SAS 112 communications of significant deficiencies and material weaknesses in the plan environment, and an illustrative letter for a plan with significant deficiencies and material weaknesses. Because of the many different plan situations, the Center would like to help members by sharing additional example SAS 112 communications that your firm has issued or will issue. This is a great opportunity help your firm and other Centers members. If you have client SAS 112 communications that you are willing to share with other Center members, please send them to the Center mailbox at ebpaqc@aicpa.org or fax them to the EBPAQC at 202-638-4512. Please be sure to deleted or redact the client name and any sensitive information. The Center will compile these example communications (without firm attribution) and issue a comprehensive resource of example SAS 112 EBP communications to all members. The Center website also has a SAS 112 Resource Center with valuable resources to help members understand and implement SAS 112.
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AICPA Issues 2007 EBP Audit Guide and Audit Risk Alert
The AICPA Audit and Accounting Guide, Employee Benefit Plans with conforming changes as of March 1, 2007 (the Audit Guide), and Audit Risk Alert, Employee Benefit Plans Industry Developments – 2007, are now available from the AICPA Store at www.cpa2biz.com.
The 2007 EBP Audit Guide incorporates the new standards of FASB Staff Position AAG INV-1 and SOP 94-4-1; FASB Statement No. 140; SAS No. 102 – Defining Professional Requirements in Statements on Auditing Standards; SAS No. 103 – Audit Documentation; SAS No. 112 – Communicating Internal Control Related Matters Identified in an Audit; and SAS No. 114 – The Auditor's Communication with Those Charged with Governance. To order the 2007 EBP Audit and Accounting Guide from the AICPA store, click here.
The AICPA Employee Benefit Plans Industry Developments—2007 provides an overview of recent economic, industry, regulatory, and professional developments that may affect employee benefit plan audits. Highlights of this year's Audit Risk Alert include the following:
· A detailed discussion in Appendix D of the FASB's FSP on stable value investments (FSP AAG INV-1 and SOP 94-4-1), including details about the reporting and disclosure requirements, special help regarding how to determine average yield, and a discussion of the related auditing issues, and three recently issued TPAs that provide additional implementation guidance on the FSP.
· A detailed discussion in Appendix B about SAS No. 112 including definitions and the audit evaluation process, examples of factors that impact the consideration of likelihood and magnitude of misstatements, examples of significant deficiencies and material weaknesses, and an illustrative letter for a plan with significant deficiencies and material weaknesses.
· Tentative conclusions reached by the AICPA Accounting Standards Executive Committee related to certain accounting issues in the EBP audit and accounting guide overhaul project. Those issues include accounting for contributions receivable, accounting for excess employee contributions, presentation of investment income from commingled investment funds, and disclosures for limited partnerships and similar investments.
· Information about the new Risk Assessment Standards (SAS No. 104-111), which will be effective for audits of financial statements beginning on or after December 15, 2006.
To order the 2007 EBP Audit Risk Alert from the AICPA store, click here.
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AICPA Issues Two New Technical Practice Aids on SAS No. 103
The AICPA recently issued two new Technical Practice Aids (TPAs) to assist practitioners in implementing SAS No. 103, Audit Documentation. The TPAs are attached to this Alert.
TPA 9100.06, The Effect of Obtaining the Management Representation Letter on Dating the Auditor's Report, addresses whether the auditor is required to have a signed management representation in hand as of the date of the auditor's report. It clarifies that the auditor does not need to be in physical receipt of the representation letter on the date of the auditor's report. However, management will need to have reviewed the final representation letter and, at a minimum, have orally confirmed that they will sign the representation letter, without exception, on or before the date of the representations. The auditor will, however, need to have the signed management representation letter in hand prior to releasing the auditor's report, since management's refusal to furnish written representations constitutes a limitation on the scope of the audit sufficient to preclude an unqualified opinion.
TPA 8350.01, Current Year Audit Documentation Contained in the Permanent File, addresses whether the provisions of SAS No. 103 with respect to documentation completion and retention apply to current year audit documentation maintained in the permanent file. The TPA states that SAS No. 103 applies to current year audit documentation maintained in any type of file if such documentation serves as support for the current year's audit report, including the permanent file.
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AICPA Issues Audit Interpretation and Practice Alert on Confirmation Process
The use of electronic confirmations is becoming more prevalent in today's audit environment. As such, the AICPA has recently issued Interpretation of AU Section 330, The Confirmation Process, and a revision of Practice Alert 2003-1, Audit Confirmations, to provide guidance to practitioners on the use of electronic confirmations. Those documents are attached to this Alert. The revised practice alert is a non-authoritative document that responds to practitioners' current concerns about audit confirmations. It provides guidance regarding the following topics:
· Improving confirmation response rates
· Negative vs. positive confirmation requests
· Nonresponses to positive confirmations
· Responses to positive confirmation requests indicating exceptions
· Use of electronic confirmations
· Confirmations received via fax or electronically
· Management requests not to confirm
· Alternative procedures
· Use of client personnel
· Confirmation of accounts receivable
· Confirmation of terms of unusual or complex agreements or transactions
· Confirmation of accounts payable
· Confirmation of related party transactions
· Evolving alternatives to confirmation
Confirmations are used in plan audits to obtain audit evidence supporting benefit payments, cash and investment balances, commitments and contingencies, contributions, insurance contract information, loans and mortgages, participant data, party-in-interest transactions, health and welfare plan premiums, units of participation (for example, common and collective trusts), and actuarial information.
The Professional Issues Task Force encourages practitioners to incorporate the guidance contained in the Practice Alert as soon as practicable.
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AICPA National Employee Benefit Plan Conference Recap
Over 1,300 CPAs participated in the annual AICPA Employee Benefit Plan Conference held in New Orleans on May 21–23, 2007. Speaker presentation materials for a majority of the sessions are available online to our members. Click here to view or download the speaker presentations.
The Center had a very visible presence at the conference. In addition to sponsoring an exhibit booth, the Center sponsored the conference bags, a reception for firm Designated Partners, and a New Orleans theme crossword puzzle contest. Each conference participant also was provided with the Plan Advisory: Effective Monitoring of Outsourced Plan Recordkeeping and Reporting Functions booklet, which was sent to all Center members via EAlert #100. Once again, we enjoyed talking to the many members who stopped by the Center booth.
As with past conferences, Conference Copy Inc. is offering Center Members an exclusive discount on a multimedia CD that combines audio recordings and the speaker materials of the 2007 AICPA Employee Benefit Conference. Special EBPAQC Member Discount Price: Multimedia CD - $295. Most of the conference sessions are included on this CD, which can be a valuable tool in updating your firm's staff on the topics covered at the conference, or for developing in-house training courses. (No CPE is offered for purchasing the multimedia CD.) This multimedia CD will be available for purchase in June 2007. To order the conference multimedia CD, please call Conference Copy, Inc. at 1-800-575-0580. Be sure to mention that you are a Center member.
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Mark Your Calendar- Upcoming AICPA Employee Benefit Plan Conferences
Plan to join us at the AICPA Employee Plans Accounting, Auditing and Regulatory Update Conference in Washington, DC on December 13–14, 2007. High-level managers and partners specializing in employee benefit plan audits and staff interested in high-level training should plan to attend this conference. CPE credits from this conference qualify toward your EBPAQC requirements. Click here for more information and to register.
The National Conference on Employee Benefit Plans will be held May 13-15, 2008 with an optional pre-conference session on May 12, 2008 at the Bellagio Hotel and Casino in Las Vegas, Nevada. Look for future information on how to register for this popular conference