Monitoring ERISA Audits
Since the Department of Labor (DOL) Office of Inspector General first conducted its study of ERISA audit quality in the late 1980s, it has been determined that ERISA audit deficiencies occur at an unacceptably high rate. Subsequent studies performed by the DOL Employee Benefits Security Administration (EBSA) have shown no improvement, despite both public and private sector efforts to affect change. Because no measurable improvement has been noted as a result of its prior enforcement strategy, EBSA Office of the Chief Accountant (OCA) began administering an enforcement program in 2005 to raise the quality of ERISA audits. Based on the results of reviewed firm’s ERISA audits, the OCA can reject the Form 5500 filing where it determines that an audit failure has occurred. As well, the OCA has the option to refer the substandard work to the AICPA’s Professional Ethics Division or the appropriate State Board(s) of Accountancy.
OCA administers three different enforcement programs to assess the audit quality of audit firms. OCA conducts and onsite “Firm Inspection Program” to inspect firms with over 200 annual ERISA audit engagements. OCA typically reviews 4 or 5 firms each year under this program and they will inspect multiple ERISA engagements at each firm.
OCA has a “Mini-Inspection Program” for firms with between 100 and 200 ERISA engagements. This program is similar to the onsite firm inspection program, except that the reviews are performed at the reviewers “desk” meaning the firm will send the required documentation to the reviewer who will examine the documentation and communicate via telephone and email.
The last OCA progam is the “Augmented Workpaper Review Program”. This program is utilized for firms that perform fewer than 100 annual ERISA audits. For this program, the OCA selects applicable CPA firms from its Form 5500 database, then it randomly selects one plan audit from each selected firm for review. The review will be an in-house review conducted similar to the Mini-Inspection Program.