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SAS 136: What It Means for Plan Sponsors

Mar 16, 2022

Denise Finney, Partner-in-Charge of EisnerAmper’s Pension Services Group, highlights the key components of SAS 136, which is effective for December 31, 2021, plan year-ends, and its impact on 401(k) and other ERISA plans and their corresponding plan sponsors.


Denise Finney: Hello. My name is Denise Finney. I specialize in auditing employee benefit plans, and I'm the partner in charge of the pension services group here at EisnerAmper. There is a new auditing standard for ERISA plans that is effective for December 31st, 2021 plan year ends. I wanted to take this opportunity to provide a summary of what you need to know about the new standard, which focuses on management's responsibilities and changes to some terminology.

The term limited scope audit is gone. It's been replaced with ERISA section 103(a)(3)(C) audit. Try to say that three times fast. It's a real tongue twister. Plan management can expect to see an update to all correspondence, such as the engagement letter, auditor's opinion, management representation letter, governance letter and management letter. Before we begin to work on the plan audit, we will be inquiring of plan management about how they determined that the entity preparing and certifying the information is a qualified institution.

To assist plan sponsors, the AICPA employee benefit plan audit quality center has a great tool to assist plan management in assessing whether the conditions for electing an ERISA section 103(a)(3)(C) audit have been met. The engagement letter will include language for plan management to agree to certain items, such as prior to dating the audit report plan management will provide a draft of the form 5500 that is substantially complete. A copy of Schedule H is not enough. The form 5500 includes all applicable schedules, such A, C, D, R and SB. In addition, the engagement letter will include plan management's acknowledgement of its responsibilities to maintain a current plan instrument, including all plan amendments, as well as administering the plan and determining that the plans transactions that are presented and disclosed in the financial statements are in conformity with the plans provisions, including maintaining sufficient participant records to determine the benefit due or which may become due to participants.

Another new terminology includes reportable findings. The standard requires auditors to communicate in writing to those charged with governance, reportable findings from the audit procedures performed relating to plan provisions. Reportable findings can be an identified instance of non-compliance or suspected non-compliance with laws or regulations, a finding arising from the audit that we believe is significant and relevant to those charged with governance, or an indication of deficiencies in internal control identified during the audit. It is important to note that the standard prohibits us from issuing a written communication stating that no reportable findings were identified during the audit.

I hope that you found this helpful, and we look forward to performing the audits of your plans this year.

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Denise Finney

Denise Finney is the Partner-in-Charge of the Pension Services Group dedicated to employee benefit plan audits. With 15 years of public accounting experience, she specializes in assisting clients with annual audit requirements regarding employee benefit plans.

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