Independence for auditing employee benefit plans updated
ARTICLE | October 25, 2022
Authored by RSM US LLP
The U.S. Department of Labor’s (DOL) Employee Benefits Security Administration has released Interpretative Bulletin 2022-01, Interpretative Bulletin Relating to the Independence of Employee Benefit Plan Accountants, which updates the independence requirement for accountants who audit employee benefit plans (EBP) under section 103(a)(3)(A) of the Employee Retirement Income Security Act. The changes update Interpretative Bulletin 1975 that sets out the guidelines for independence of auditors of EBPs.
The revisions broadly focus on removing certain outdated and unnecessarily restrictive provisions, and to reorganize other provisions for clarity, including:
- Introducing an exception for new audit engagements so that an accountant or firm is not disqualified from accepting a new audit engagement merely because of holding publicly traded securities of a plan sponsor during the period covered by the financial statements. This exception is available as long as the accountant, accounting firm, partners, shareholder employees, and professional employees of the accountant's engagement office, and their immediate family have disposed of any holdings of such publicly traded securities prior to the period of professional engagement. This change applies to publicly traded securities only
- Introducing a new definition for the “period of professional engagement.” The period of professional engagement is defined as “the period beginning when an accountant either signs an initial engagement letter or other agreement to perform the audit or begins to perform any audit, review or attest procedures (including planning the audit of the plan's financial statements), whichever is earlier, and ending with the formal notification, either by the member or client, of the termination of the professional relationship or the issuance of the audit report for which the accountant was engaged, whichever is later”
- Introducing a new definition of “office” for the purpose of determining who is a ‘member’ of the audit firm for independence purposes so that the rules can be more applicable to current working circumstances. The new definition focuses on the substance of the involvement in the audit for the purpose of office classification, rather than the physical location of the individual. The updated definition of the term ‘office’ is modeled on the definition used in the American Institute of Certified Public Accountants (AICPA) independence standards.
The changes in Interpretative Bulletin 2022-01 became effective on September 6, 2022.
Call us at +1 213.873.1700, email us at firstname.lastname@example.org or fill out the form below and we'll contact you to discuss your specific situation.
This article was written by RSM US LLP and originally appeared on 2022-10-25.
2022 RSM US LLP. All rights reserved.
RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each is separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.
Vasquez & Company LLP is a proud member of the RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.
Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise and technical resources.
For more information on how Vasquez & Company LLP can assist you, please call +1 213.873.1700.
Subscribe to receive important updates from our Insights and Resources.