MNCPA's Employee Benefit Plan Review Task Force evaluates and provides collaborative feedback to CPAs on masked employee benefit plans that their firms have audited and submitted anonymously to the task force for review. In its second year, the task force is comprised of 18 volunteers representing 16 public accounting firms.    

Report findings

    At the January meeting, the task force noted similar findings to last year in addition to new findings primarily related to standards effective in the last year. The task force encourages anyone who performs plan audits to avoid the following mistakes and omissions in the plan's financial statements for the upcoming audit season:    

Fair value measurements

•     Missing disclosure by major category    
•     Missing disclosure for investments in certain entities that calculate net asset value per share (or its equivalent) (Accounting Standards Update 2009-12)    
•     Missing certain disclosure language, including definition of fair value and changes to valuation methodology    
•     Leveling table does not reconcile with investments reported on statement of net assets    

Investment in general assets of the insurance company missing the following disclosures:

•     Limitation on plan's ability to execute transaction at contract value    
•     Description of the events and circumstances that would permit issuers to terminate the contracts and settle at amounts that differ from contract value    
•     Average and crediting yield    

Other examples of missing disclosures:

•     Accounting policy for expenses when significant    
•     Change in net appreciation (depreciation) by investment type    
•     Investment income recognition policy    
•     Forfeiture footnote and/or no disclosure for use of forfeitures    
•     Description of employer contribution calculation    

Fully benefit-responsive contracts

•     Missing required fully-benefit responsive language when adjustment from fair value to contract value present on statements of net assets available for benefits    
•     Disclosure inaccurate based on type of benefit-responsive contract (common collective trust versus insurance company general account)    
•     Disclosure included in footnotes when not applicable based on plan investments    

Other Items

•     Financial statements present two years however the footnotes were not comparative    
•     FASB codification not incorporated Supplemental schedule of assets (held at end of year) not presented accurately in accordance with Form 5500 instructions    
•     Missing required reportable transactions supplemental schedule    

Take advantage of this member benefit

    Plan audits, although seemingly simple, can be the biggest headache when it comes to accurately presenting the financial statements, including the related footnote disclosures and supplemental schedules. The Department of Labor continually reviews practitioners' employee benefit plan audit practice and has found deficiencies during their investigation. Submitting financial statements to the task force is an incredibly easy way to receive informal feedback at no cost from professionals outside your firm -- not a non-regulatory agency or peer reviewer.    

    Hearing opinions from other professionals in the industry is an invaluable resource and effortless method to enhance the reporting of your firm.    

     Learn how to submit a report.    

Alicia R. Schmidt, CPA, is a manger at LarsonAllen LLP in the employee benefit assurance services group. Her background includes audits of single, multiple and multi-employer employee benefit plans, including defined benefit and defined contribution pension plans, health and welfare plans, and other tax-exempt organizations. She can be contacted at aschmidt@larsonallen.com.