Statement on Auditing Standards (SAS) No. 112, Communicating Internal Control Related Matters Identified in an Audit,provides guidance regarding the identification and evaluation of control deficiencies during an audit. It also provides guidance regarding communication of those deficiencies that are significant deficiencies or material weaknesses to management and those charged with governance. The written communications required by SAS No. 112 apply to audits of employee benefit plans. Situations requiring written communication could include, for example, the auditor needing to propose significant adjusting accounting entries, a lack of segregation of accounting duties, an inability of plan management to properly value plan investments, and inadequate oversight over plan recordkeeping and reporting by a third-party administrator.
To assist plan administrators, sponsors and trustees in understanding the importance and benefits of establishing an effective monitoring program over third-party service providers that provide plan recordkeeping and reporting services, the Employee Benefit Plan Audit Quality Center of the American Institute of Certified Public Accountants has developed a Plan Advisory, Effective Monitoring of Outsourced Plan Recordkeeping and Reporting Functions. This Advisory contains useful information for selecting service providers and addresses monitoring of third-party administrator controls over plan accounting information. In addition, this Advisory includes suggestions for conducting on-site reviews of third-party service providers and examples of controls that help ensure complete and accurate plan accounting information and reporting. The Plan Advisory is available in full at http://ebpaqc.aicpa.org/Resources/Plan+Advisory .
It should also be noted that The United States Department of Labor (DOL) publication, Meeting Your Fiduciary Responsibilities, provides an overview of the basic fiduciary responsibilities applicable to retirement plans under the Employee Retirement Income Security Act. The DOL publication is available in full at http://www.dol.gov/ebsa/pdf/fiduciaryresponsibility.pdf.
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