In a comment letter to the American Institute of CPAs on its proposal to modify audits of Employee Retirement Income Security Act-based employee benefit plans, the American Bankers Association warned of unintended consequences regarding the requirement for auditors to post findings on specific benefit plan provisions. The association noted that there is a high likelihood that the findings, which will be made publicly available, will be misinterpreted by many. Due to these unintended consequences “this requirement could actually cause more harm than help.”
Focusing on bank custodial responsibilities during a “limited scope audit,” the ABA also recommended changes to the auditing guidance to recognize the vast changes in accounting requirements and custodial operations that have occurred since ERISA was enacted in 1974. More specifically, clarification is needed related to reliance on a bank’s certification of the completeness and accuracy of investment information when assets are not physically held by the custodian, as well as to bank and benefit plan sponsor responsibilities related to reporting of fair values. For more information, contact ABA’s Michael Gullette.