The American Institute of CPAs’ Auditing Standards Board voted to issue a long-awaited standard on audits of financial statements of employee benefit plans, although it is still awaiting some details before the standard takes effect.

The Statement on Auditing Standards Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA deals with an auditor’s responsibility to form an opinion and report on the audit of financial statements of employee benefit plans subject to the Employee Retirement Income Security Act of 1974, also known as ERISA. The standard also covers the form and content of the auditor’s report issued as a result of an audit of ERISA plan financial statements.

The Department of Labor issued a report in 2015 criticizing the quality of employee benefit plan audits by CPAs, and the AICPA pledged to fix the problem (see AICPA pushes for auditing and assurance changes). The Labor Department’s Employee Benefits Security Administration found serious deficiencies in 39 percent of the audits of employee benefit plans that it examined. In response, the AICPA developed a six-point plan to improve audits, and launched a certification program to better train CPAs on auditing employee benefit plans as part of its Enhancing Audit Quality initiative.

The new standard has been in the works ever since then and the AICPA indicated Monday that its Auditing Standards Board is still working on some amendments. The AICPA proposed the standard in April 2017 and in August 2017 extended the due date for comments (see AICPA extends due date for comments on employee benefit plan audit standard).

The Auditing Standards Board is already anticipating whether conforming amendments to the new standard will be necessary once the Proposed Statements on Auditing Standards Auditor Reporting and Related Amendments are voted to be issued, which is expected to occur in the first half of 2019.

The standard includes new requirements for engagement acceptance, audit risk assessment and response, communications with those charged with governance, procedures for an ERISA section 103(a)(3)(C) audit, along with considerations relating to the Form 5500, the annual return and report for employee benefit plans.

The standard also includes a new report format for ERISA section 103(a)(3)(C) audits. For audits of ERISA plan financial statements only, the standard would apply in place of AU-C section 700, Forming an Opinion and Reporting on Financial Statements, and paragraph .09 of AU-C section 725, Supplementary Information in Relation to the Financial Statements as a Whole (AICPA, Professional Standards). The stamdard also would amend various other AU-C sections in the AICPA Professional Standards.

When the standard is ultimately finalized and issued, it is expected to be effective no earlier than for audits of financial statements for periods ending on or after Dec. 15, 2020.