The AICPA® Employee Benefit Plan Audit Quality Center (EBPAQC) has prepared this advisory to provide you, the plan sponsor, administrator or trustee with an understanding of and insights into the independent audit of the financial statements of an employee benefit plan. While this document addresses audits of financial statements that are prepared for purposes of filing with the U.S. Department of Labor (DOL) on Form 5500, Annual Return/Report of Employee Benefit Plan (Form 5500), much of the information may be useful in understanding the processes involved in the audits of plans that file a Form 11-K with the U.S. Securities and Exchange Commission (SEC).
A financial statement audit is conducted by an independent certified public accountant. The independent auditor’s overarching goal is to obtain reasonable — but not absolute — assurance that the financial statements prepared by plan management are fairly presented. To communicate that assurance, the independent auditor provides an opinion about whether the plan’s financial statements are presented fairly, in all material respects, in accordance with U.S. generally accepted accounting principles as promulgated by the Financial Accounting Standards Board (FASB) (GAAP) or a special purpose framework that is acceptable to the DOL, such as the modified cash basis of accounting.
This advisory describes the roles and responsibilities of individuals involved in the plan’s financial reporting and audit process, and the purpose, objectives and benefits of a financial statement audit. The term plan management as used throughout this document refers to the party or parties that created the plan and/or have ultimate responsibility for the plan’s maintenance, compliance, and oversight and may include the plan sponsor, plan administrator, plan committees or others charged with governance. This advisory also discusses audit scope, general audit matters common to all audits, the audit process, the auditor’s report, and what you can do to assist in the audit process.