Employee Benefit Plan Audit Engagement Checklist … · 00-8 JAN 2014 Employee Benefit Plan Audit Engagement Checklist (Ending on or After December 15, 2012) 20,701 AICPA Peer Review

00-8 JAN 2014 Employee Benefit Plan Audit Engagement Checklist (Ending on or After December 15, 2012) 20,701

AICPA Peer Review Program Manual PRP §20,700

Section 20,700

Employee Benefit Plan Audit Engagement Checklist (For Financial Statements With Periods Ending on or After December 15, 2012)

Instructions for Use of the Checklist for Review of Audits of Employee Benefit Plans

This checklist was developed for use by reviewers of audits of employee benefit plans. It should be used in conjunc-tion with other guidance materials issued to implement the peer review programs of the AICPA. Questions regarding these instructions or any other materials should be directed to AICPA Peer Review at 919.402.4502.

The Practice Monitoring Task Force (PMTF) is studying ways in which the peer review process can aid in enhancing the quality and performance of audits of employee benefit plans by member firms. The PMTF has made a recommen-dation to the Peer Review Board (PRB) to enhance the peer review process of these plans.

One recommendation made by the PMTF resulted in identifying certain questions that focus on the audit areas noted as most frequently not being performed in accordance with professional standards. These questions are in bold in the checklist. The reviewer should be aware that failures to conform to professional standards in these areas may be seen by the Department of Labor (DOL) as resulting in substandard audits. Auditors whose audits are deemed sub-standard by the DOL could be required to perform additional procedures and may be referred by the DOL to the AICPA Professional Ethics Division, state boards of accountancy, or both. In addition, the PRB has concluded that a failure to properly perform audit procedures in one or more of the areas identified should be considered in determin-ing whether the engagement has not been performed in accordance with professional standards in all material re-spects.

If the reviewer determines there was a failure to reach an appropriate conclusion on the application of professional standards in all material respects, the reviewer should consider whether the expansion of the scope of the peer review is necessary. The decision to expand scope should be documented in the review working papers. The objective of ex-pansion of scope would be to determine whether the failure is indicative of a pattern of such failures, a deficiency or significant deficiency in the design of the reviewed firm’s system of quality control or in its compliance with the sys-tem, or both.

The team captain should promptly inform the firm when an engagement is not performed or reported in conformity with professional standards in all material respects and remind the firm of its obligation under professional standards to take appropriate action. The reviewed firm should investigate the issue questioned by the review team and deter-mine what timely action, if any, should be taken, including actions planned or taken to prevent unwarranted continued reliance on its previously issued reports. The reviewed firm should then advise the team captain of the results of its investigation, including parties consulted, and document on the Matter for Further Consideration (MFC) form pre-pared by the reviewer the actions planned or taken or its reasons for concluding that no action is required.

If the firm has taken action, the review team should review documentation of such actions (for example, reissued au-dit reports or letter recalling previously issued reports) and consider what action the firm has taken and whether the action is appropriate. If the firm has not taken action, the review team should consider whether the planned actions are appropriate.

20,702 Peer Review Engagement Checklists—System Reviews 00-8 JAN 2014

PRP §20,700 Copyright © 2014, American Institute of Certified Public Accountants, Inc.

The questions in this checklist emphasize reporting matters and general procedures ordinarily performed by an inde-pendent auditor in the audit of financial statements of employee benefit plans. All “No” answers, for which an MFC form was not generated, must be thoroughly explained in section V, “Explanation of ‘No’ Answers and Other Com-ments,” of this checklist.

This checklist is not intended to be an all-inclusive document containing all disclosure and audit procedures related to employee benefit plans. It is a summary of commonly addressed key areas and related concepts or procedures. There-fore, it should be used in conjunction with various reference materials dealing with reporting, disclosure, and audit procedure issues in order to sufficiently evaluate employee benefit plan engagements. These additional materials in-clude the AICPA Checklists and Illustrative Financial Statements: Defined Contribution Retirement Plans and other similarly comprehensive disclosure materials and the AICPA Audit and Accounting Guide Employee Benefit Plans (as of January 1, 2013).

Notes to Reviewer: Section IV, “Report and Financial Statements,” of this checklist includes general and separate subsections relating to the Report and Financial Statements for a Defined Contribution Plan (subsection A); the Report and Financial Statements for a Defined Benefit Pension Plan (subsection B); and the Report and Financial Statements for a Health and Welfare Plan (subsection C).

The AICPA established the Employee Benefit Plan Audit Quality Center (EBPAQC) (http://ebpaqc.aicpa.org) as a voluntary firm membership to enhance quality of audits of employee benefit plans subject to Employee Retirement Income Security Act of 1974 (ERISA). EBPAQC firm members have agreed, as a condition of membership, to have employees of an EBPAQC member firm review the ERISA engagements selected for its peer review. To avoid mis-understandings, it is advisable that team captains include a member that will allow the firm to comply with this mem-bership requirement. Of course, if the team captain’s firm is a member of the EBPAQC, this would not be an issue.

Note: This checklist has been updated through Statement on Auditing Standards (SAS) No. 126, The Auditor’s Considera-tion of an Entity’s Ability to Continue as a Going Concern (Redrafted) (AICPA, Professional Standards, AU-C sec. 570); Financial Accounting Standards Board Accounting Standards Update No. 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05; Statement of Position 09-1, Performing Agreed-Upon Procedures Engagements That Address the Completeness, Accuracy, or Consistency of XBRL-Tagged Data (AICPA, Technical Practice Aids, AUD sec. 14,440); and Statement on Quality Control Standards No. 8, A Firm’s System of Quality Control (AICPA, Professional Standards, QC sec. 10).



Explanation of References:

AAG-EBP AICPA Audit and Accounting Guide Employee Benefit Plans (as of January 1, 2013)

AU-C Reference to section number for clarified Statements on Auditing Standards in AICPA Professional Standards

CFR Code of Federal Regulations

ET Reference to section number in AICPA Code of Professional Conduct in AICPA Professional Standards

FASB ASC Financial Accounting Standards Board Accounting Standards Codification

FinREC Financial Reporting Executive Committee

QC Reference to section number for Statements on Quality Control Standards in AICPA Professional Standards



ENGAGEMENT PROFILE Engagement Code No.

Owner/Partner

Manager

Engagement Quality Control Reviewer*

Office

Date of Financial Statements†

Date of Report

Date Report Released

This engagement involves reporting on a

defined benefit plan health and welfare plan defined contribution plan (excluding 403(b) plans) employee stock ownership plan 403(b) plan other

Type of report issued: unqualified qualified disclaimer

Department of Labor limited scope disclaimer adverse

Were other auditors involved in this engagement? Yes No

At the time the report or financial statement(s) on the client’s current year was issued or released, were there fees, billed or unbilled, or note(s) receivable arising from such fees that remained unpaid for any professional services pro-vided more than one year prior to the date of the report? Yes No

Key data reported on by this office for this engagement: Total assets ............................................................................................................... $ Net assets available for benefits ................................................................................ $ Total additions—income and contributions .............................................................. $ Net increase (decrease) in net assets available for benefits ...................................... $

For a defined benefit plan: Total benefit obligations ........................................................................................... $ Changes in benefit obligations .................................................................................. $

For a health and welfare plan: Total benefit obligations ........................................................................................... $ Changes in benefit obligations .................................................................................. $ Total claims paid ....................................................................................................... $

List any nonattest services [ET 101.05] performed for the client during the period of the professional engagement orthe period covered by the financial statements.

Owner or

Partner

Manager

(or equivalent)

Personnel Continuity: Number of years assigned to this engagement ...................................................................... Number of years in current position on this engagement .....................................................

* Not applicable unless required by firm policy. † To determine the applicability of all cross-referenced pronouncements, consider their effective dates.



Audit hours on this engagement: Prior to After Commencement During Completion of Total of Field Work Field Work Field Work

Owner or Partner ................................................ Engagement Quality Control Reviewer* ............ Manager (or equivalent) ................................... Senior/Other Professionals ................................ Total hours ......................................................... Total budgeted ...................................................

Describe the engagement team’s experience and training relevant to this engagement.



AUDIT ENGAGEMENT RISK ASSESSMENT

This section of the engagement profile should be completed by the engagement partner or manager (or by the reviewer based on the interview of the engagement team).

1. Summarize key risk factors the engagement team considered with regard to the entity, its environment, fraud, entity level controls, and specific accounts.

2. What were the audit responses to those key risk factors, and where is that documented in the working papers?

SOC 1SM REPORT(S)

1. Which audit areas did you rely on a SOC 1 report(s) (formerly SAS 70 report) to reduce substantive testing?

2. What other procedures were performed in these audit areas, and where is that documented in the working papers?

INITIAL AUDITS (PLANS NOT PREVIOUSLY AUDITED OR SUCCESSOR AUDITOR)

1. What procedures were performed on the beginning balance of net assets available for benefits to audit the completeness and accuracy of participant data and records of prior years, especially as they relate to par-ticipant eligibility, contributions, and distributions; the amounts and types of benefits; the eligibility for benefits; and individual account balances?



2. Where in the audit working papers are these audit responses documented?

Date Engagement Date Checklist Reviewed Review Performed by Team Captain

Reviewer Signature Team Captain Signature



Checklist for Review of Audits of Employee Benefit Plans

Contents

Section Page

I. General Audit Planning Procedures Client and Engagement Acceptance and Continuance ................................................................. 20,710 Client Understanding .................................................................................................................... 20,711 Audit Planning .............................................................................................................................. 20,711 Fraud Considerations .................................................................................................................... 20,713 IT Considerations ......................................................................................................................... 20,714 Auditor’s Specialist, If Used ......................................................................................................... 20,714 Internal Controls and Control Risks ............................................................................................. 20,715 Service Auditor Reports ............................................................................................................... 20,715 Related Party/Party in Interest Transactions ................................................................................. 20,716 Audit Plan ..................................................................................................................................... 20,716

II. Audit Areas Highest Risk Audit Areas ............................................................................................................. 20,717 Non-Interest Bearing Cash ........................................................................................................... 20,718 Participant Data and Participant Allocations ............................................................................... 20,718 Investments and Investment Income (Including Interest Bearing Cash) ........................................ 20,719 Contributions Received and Related Receivables ........................................................................ 20,721 Receivables (Other Than Contributions Receivable) .................................................................... 20,722 Property and Equipment Used in Plan Operations ....................................................................... 20,723 Liabilities ...................................................................................................................................... 20,723 Benefit and Claim Payments ........................................................................................................ 20,724 Administrative Expenses .............................................................................................................. 20,724 Plan Obligations ........................................................................................................................... 20,725 Commitments and Contingencies ................................................................................................. 20,725 Other Considerations .................................................................................................................... 20,725

III. General Audit Procedures Audit Sampling ............................................................................................................................. 20,727 Substantive Analytical Procedures ............................................................................................... 20,727 Material Accounting Estimates ..................................................................................................... 20,728 Representation Letters .................................................................................................................. 20,729 Compliance With Laws and Regulations ...................................................................................... 20,730 Going Concern Considerations ..................................................................................................... 20,731 Communication of Internal Control Related Matters ................................................................... 20,732 Subsequent Events ........................................................................................................................ 20,732 Communications With Those Charged With Governance ............................................................ 20,733 Audit Documentation ................................................................................................................... 20,734 Supervision and Review ............................................................................................................... 20,736

IV. Report and Financial Statements

Report and Financial Statements for All Employee Benefit Plans ........................................................ 20,739 Auditor’s Report ........................................................................................................................... 20,739 Financial Statements and Footnotes ............................................................................................. 20,740 General ................................................................................................................................... 20,740 Fair Value Measurements ............................................................................................................. 20,743 Investments in Entities That Calculate Net Asset Value per Share .............................................. 20,745

A. Report and Financial Statements for a Defined Contribution Plan ................................................... 20,747 Financial Statements and Footnotes ............................................................................................. 20,747 General ................................................................................................................................... 20,747 Statement of Net Assets Available for Benefits ........................................................................... 20,747



Section Page

Statement of Changes in Net Assets ............................................................................................. 20,748 403(b) Plans or Arrangements ..................................................................................................... 20,749 B. Report and Financial Statements for a Defined Benefit Pension Plan .............................................. 20,751 Auditor’s Report ........................................................................................................................... 20,751 Financial Statements and Footnotes ............................................................................................. 20,751 General ................................................................................................................................... 20,751 Statement of Net Assets Available for Benefits ........................................................................... 20,751 Statement of Changes in Net Assets ............................................................................................. 20,752 Statement of Accumulated Plan Benefits ..................................................................................... 20,752 Statement of Changes in Accumulated Plan Benefits ................................................................... 20,753 C. Report and Financial Statements for a Health and Welfare Plan ...................................................... 20,754 Financial Statements and Footnotes ............................................................................................. 20,754 General ................................................................................................................................... 20,754 Statement of Net Assets Available for Benefits ........................................................................... 20,755 Statement of Changes in Net Assets ............................................................................................. 20,756 Statement of Benefit Obligations .................................................................................................. 20,756 Statement of Changes in Benefit Obligations ............................................................................... 20,757

V. Explanation of “No” Answers and Other Comments ............................................................................. 20,758

VI. Conclusions ............................................................................................................................................ 20,759 Notes: This is a highly summarized checklist. Reviewers may wish to consult the professional standards cited for

detailed information about the requirements. Bulleted points are generally batched into one question on this checklist. The reviewer should weigh each bullet point separately and in the aggregate when concluding whether the professional standards requirement was met in all material respects.

The AU-C sections contain application materials that follow the requirements section and are numbered using an A- prefix. The application materials contain guidance that is not in itself required but is relevant to the proper application of the requirements of the AU-C section. If a reviewed firm does not perform the proce-dures outlined in the application materials, the reviewer should determine if the procedures that were per-formed are sufficient to meet the requirements. Citations from application materials are noted with an **.



I. GENERAL AUDIT PLANNING PROCEDURES

Ques. N/A‡ Yes No| | Ref.

Client and Engagement Acceptance and Continuance:

Did the engagement partner perform procedures regarding the ac-ceptance of the client relationship and the specific audit engagement?[AU-C 220.14–.15] A101

If a scope limitation was imposed by management that would lead to adisclaimer, was the audit required by law or regulation? [AU-C 210.07] A102

If the auditor succeeded another auditor, did the successor auditor initiatecommunications with the predecessor auditor to ascertain whether therewere matters that might assist the auditor in determining whether to ac-cept the engagement? [AU-C 210.11–.12] A103

Did the successor auditor obtain sufficient appropriate audit evidenceregarding opening balances about whether opening balances contain mis-statements that materially affect the current period’s financial statementsand appropriate accounting policies reflected in the opening balanceshave been consistently applied? [AU-C 510.06–.11] A104

If the auditor became aware of information during the audit thatmight require revision of prior year presented financial infor-mation, the auditor has made the required inquiries of the pre-decessor auditor. [AU-C 512.12]

If anything has been noted that may indicate a lack of independence,integrity, and objectivity, was the matter identified and appropriatelyresolved by the firm and its effects appropriately considered? [ET 101 and 102; QC 10.21–.26] A105

Did the member establish and document in writing his or her understand-ing with the client with regard to specific criteria relating to nonattestservices? [ET 101.05; QC 10.21–.26] A106

Have engagement personnel (including leased and per diem employees)been appropriately advised of the need to observe applicable independ-ence, integrity, and objectivity requirements concerning the client andany related nonclient parent, investor, investee, subsidiary, or affiliate?[QC 10.21–.26] A107

Were all fees, billed or unbilled, or note(s) receivable arising from suchfees for any professional services provided more than one year prior tothe date of the report paid prior to the issuance of the report for the cur-rent engagement? [ET 191.103–.104; QC 10.21–.26] A108

Does it appear the firm’s guidelines for acceptance and continuance ofclient relationships, including performing specific engagements for theclient, were complied with, based on inquiry of the accountant or reviewof engagement files, if any? [QC 10.27–.30] A109

Were scheduling and staffing requirements identified on a timely basisand approved by appropriate personnel? [QC 10.31–.34 and 10.A17–.A31] A110

‡ The “N/A” column should be used when the item either does not exist or is not material. | | All “No” answers should be handled in either of the following ways: (1) discussed on a Matter for Further Consideration (MFC) form with the MFC form number noted in the “Ref.” column or (2) discussed on the pages provided at the end of this checklist if no MFC form was generated.



Ques. N/A Yes No Ref.

Client Understanding:

Did the auditor establish the agreed upon terms of the audit engagement, which should be documented in an engagement letter or other suitableform of written agreement? The agreement should include the following:[AU-C 210.10] A111

The objective and scope of the audit of the financial statements[AU-C 210.10a]

The responsibilities of the auditor [AU-C 210.10b]

The responsibilities of management, including management’sacknowledgement of [AU-C 210.10c]

— the fair presentation of the financial statements in accord-ance with the applicable financial reporting framework[AU-C 210.06b(i)]

— the design, implementation, and maintenance of internalcontrol relevant to the preparation and fair presentation offinancial statements that are free from material misstate-ment, whether due to fraud or error [AU-C 210. 06b(ii)]

— providing access to all information of which management isaware that is relevant to the preparation and fair presenta-tion of the financial statements, such as records, documen-tation, and other matters [AU-C 210.06b(iii)(1)]

— providing the auditor with additional information that theauditor may request from management for the purpose ofthe audit [AU-C 210.06b(iii)(2)]

— providing the auditor with unrestricted access to persons with the entity from whom the auditor determines it neces-sary to obtain audit evidence [AU-C 210.06b(iii)(3)]

A statement that because of the inherent limitations of an audit,together with the inherent limitations of internal control, an un-avoidable risk exists that some material misstatements may notbe detected, even though the audit is properly planned and per-formed in accordance with generally accepted auditing stand-ards (GAAS) [AU-C 210.10d]

Identification of the applicable financial reporting frameworkfor the preparation of the financial statements [AU-C 210.10e]

Reference to the expected form and content of any reports to beissued by the auditor and a statement that circumstances may arise in which a report may differ from its expected form andcontent [AU-C 210.10f]

Audit Planning:

Did the auditor properly plan the audit giving appropriate considerationto the following? [AU-C 300] Specifically did the auditor A112

involve the engagement partner and other key members of theengagement team in planning the audit, including planning andparticipating in the discussion among engagement team mem-bers? [AU-C 300.05]

evaluate compliance with relevant ethical requirements? [AU-C 300.06b]




establish an overall audit strategy that sets the scope, timing, and direction of the audit and that guides the development ofthe audit plan? [AU-C 300.07]

in developing the overall audit strategy, did the auditor [AU-C 300.08]

— identify the characteristics of the engagement that define itsscope;

— ascertain the reporting objectives of the engagement in or-der to plan the timing of the audit and the nature of thecommunications required;

— consider the factors that, in the auditor’s professionaljudgment, are significant in directing the engagementteam’s efforts;

— consider the results of preliminary engagement activitiesand, when applicable, whether knowledge gained on otherengagements performed by the engagement partner for the entity is relevant; and

— ascertain the nature, timing, and extent of resources neces-sary to perform the engagement?

develop an audit plan that includes a description of [AU-C 300.09]

— the nature and extent of planned risk assessment proce-dures;

— the nature, timing, and extent of planned further audit pro-cedures at the relevant assertion level; and

— other planned audit procedures that are required to be car-ried out so that the engagement complies with GAAS?

plan the nature, timing, and extent of direction and supervisionof engagement team members and review of their work? [AU-C 310.11]

consider whether specialized skills are needed in performing theaudit? [AU-C 300.12]

Did the auditor document the overall audit strategy, the audit plan, andany changes made during the audit engagement to the overall audit strat-egy or the audit plan and the reasons for such changes? [AU-C 300.14] A113

Did the auditor consider, prior to the auditor’s identification and assess-ment of the risks of material misstatement, such matters as [AU-C 300.A2**] A114

the analytical procedures to be applied as risk assessment pro-cedures?

a general understanding of the legal and regulatory frameworkapplicable to the entity and how the entity is complying withthat framework?

the determination of materiality?

the involvement of specialists?

the performance of other risk assessment procedures?

If consideration was given to the work of internal auditors in determin-ing the scope of the audit, was it done in accordance with professionalstandards? [AU-C 610] A115




Fraud Considerations:

Did the auditor properly document compliance with fraud risk considera-tions? [AU-C 240.44] Documentation should summarize A116

discussion among engagement personnel in planning the auditregarding the susceptibility of the entity’s financial statementsto material misstatement due to fraud, how management could perpetrate and conceal fraudulent financial reporting, and how assets of the entity could be misappropriated. [AU-C 240.15]

inquiries of management and others within the entity about therisks of fraud. [AU-C 240.17–.21]

consideration of preliminary analytical procedures including pro-cedures specifically related to revenue. [AU-C 240.22]

other information obtained that indicates risks of material mis-statement due to fraud. [AU-C 240.23]

the identification and the assessment of material misstatementdue to fraud at the financial statement level, and at the assertionlevel for classes of transactions, account balances, and disclo-sures. [AU-C 240.25]

the auditor’s reasons supporting a conclusion that improperrevenue recognition is not a risk of material misstatement due tofraud. [AU-C 240.26]

the assessed risks of material misstatements due to fraud as sig-nificant risks and, accordingly, to the extent not already doneso, the auditor’s understanding of the entity’s related controls, including control activities, relevant to such risks, including theevaluation of whether such controls have been suitably de-signed and implemented to mitigate such fraud risks. [AU-C 240.27]

the auditor’s overall responses to address the assessed risks of material misstatement due to fraud at the financial statementassertion level. The auditor should incorporate an element ofunpredictability in the selection of the nature, timing, and extentof audit procedures. [AU-C 240.28–.30]

the auditor’s identification of management’s override of con-trols as a significant risk. The risks of management override ofcontrols should be addressed apart from any conclusions re-garding the existence of more specifically identifiable risks.Appropriate procedures should be performed, including testingthe appropriateness of journal entries and other adjustmentsmade in preparation of the financial statements, review of ac-counting estimates for bias, and evaluation of significant trans-actions that are outside the normal course of business for theentity. [AU-C 240.31–.32]

evaluation of the accumulated results of auditing proceduresand whether they affect the assessment of risks of material mis-statement due to fraud made earlier in the audit or indicate a previously unrecognized risk of material misstatement due tofraud. [AU-C 240.34]

the evaluation of misstatements, whether material or not, andwhether they are indicative of fraud and whether managementwas involved. [AU-C 240.34–.37]




the nature of the communications about fraud made to man-agement, those charged with governance, and others. [AU-C 240.39–.41]

the nature of the communications about fraud made to regula-tory and enforcement authorities. [AU-C 240.42]

IT Considerations:

Did the auditor properly identify risks associated with the role of IT? Thiscould include the following considerations: A117

Identification of the role of IT relative to financial transactionand financial reporting. [AU-C 315.A53–.A60**]

Risk of material misstatement associated with financial transac-tion and financial reporting. [AU-C 320]

Obtaining sufficient knowledge of the information system, in-cluding the related business processes relevant to financial re-porting. [AU-C 315.A84–.A90**]

Obtaining an understanding of how the entity has responded torisks arising from IT. [AU-C 315.22]

Identification and assessment of potentially mitigating controlsfor those inherent risks, including application and general com-puting controls. [AU-C 315.A54–.A60**]

The firm possesses, either internally or through the use of a specialist, the required expertise to address the risks associatedwith IT. [AU-C 300.A18–.A19**]

The auditor, directly or through the use of a specialist, suffi-ciently identified and addressed risks associated with IT andinternal controls. [AU-C 315]

Did the auditor properly identify and document the linkage between fur-ther audit procedures (test of controls, substantive procedures, or both) and the IT risk assessment? [AU-C 330] This could include the following: A118

The auditor documented the understanding of the entity and itsenvironment. [AU-C 315]

The auditor, using a specialist if necessary, used professional processing IT skills to determine the effect of IT on the audit, tounderstand the IT controls, or to design and perform tests of ITcontrols or substantive procedures. [AU-C 310.A19**]

Auditor’s Specialist, If Used: If an auditor’s specialist was used (for example, actuary, appraiser, in-vestment specialist, or health claims specialist), did the auditor apply the appropriate procedures to evaluate the qualifications and findings of thespecialist? Consider whether A119

appropriate considerations and evaluations were made in ac-cordance with professional standards. [AU-C 620.08–.11]

the evaluation of objectivity included the inquiry regarding in-terests and relationships that may create a threat to the objec-tivity of the auditor’s specialist. [AU-C 620.09]

appropriate procedures were applied to evaluate the adequacy of the work of the specialist. [AU-C 620.12]

appropriate procedures were applied to test the source data used by the specialist. [AU-C 620.12c]




Internal Controls and Control Risks:

In developing an understanding of the entity and its environment relativeto evaluation of the risk of material misstatements and the response tothe audit evidence obtained, did the auditor A120

perform risk assessment procedures including inquiries of man-agement and others within the entity, analytical procedures, andobservation and inspection? [AU-C 315.05–.11]

obtain an understanding of the entity and its environment andcomponents of its internal control in order to assess the risks ofmaterial misstatements at the assertion level and to design andperform further audit procedures responsive to assessed risks?[AU 315.12–.25]

understand the auditor’s responsibility to identify and assess therisks of material misstatement at the financial statement level and at the relevant assertion level related to classes of transac-tions, account balances, and disclosures? [AU-C 315.26–.27]

identify significant risks and obtain an understanding of theentity’s controls, including control activities, relevant to those risks, and, based on that understanding, evaluate whether such controls have been suitably designed and implemented to miti-gate such risks? [AU-C 315.28–.30]

assess that it is not possible or practicable to obtain sufficientappropriate audit evidence only from substantive proceduresrelated to some risks? If so, did the auditor obtain an under-standing of the entity’s controls over such risks? [AU-C 315.31]

design and perform substantive procedures for all relevant as-sertions related to each material class of transactions, accountbalances, and disclosure? [AU-C 330.18–.24]

Service Auditor Reports:

If the auditor is relying on a service auditor report, did the auditorsubstantively meet professional requirements regarding internalcontrol by A121

considering the controls at a service organization that may affect the plan’s transactions and internal control? [AU-C 402.09–.14]

obtaining an understanding of the controls in place at the entity and at a service organization whose services are partof the entity’s information system? [AU-C 402.03]

performing one or more of the following in order to obtainaudit evidence about the operating effectiveness of the ser-vice organization’s controls if the auditor’s risk assessmentincludes an expectation that those controls are operatingeffectively?

— Obtaining and reading the type 2 report [AU-C 402.16]

— Performing appropriate tests of controls at the serviceorganization [AU-C 402.16]

— Using another auditor to perform tests of client’s con-trols at the service organization on behalf of the userauditor [AU-C 402.16]




— Determining whether the service auditor’s report pro-vides sufficient appropriate audit evidence about theeffectiveness of the controls to support the user audi-tor’s risk assessment, if the user auditor plans to use atype 2 report as audit evidence that controls at the ser-vice organization are operating effectively [AU-C 402.17]

Related Party/Party in Interest Transactions:

Were specific procedures for determining the existence of related parties and examining identified related party transactions applied? [AU-C 550] A122

Did the auditor appropriately test material transactions with relatedparties or parties in interest to the plan? [AAG-EBP 2.107] A123

Audit Plan:

Did the auditor properly consider and document the following in thedevelopment of the audit plan and strategy and completion of the audit programs, when applicable? [AU-C 300.A21–.A23**; applicable indus-try-specific AICPA Audit Guides] Consider that A124

the overall audit strategy is a record of the key decisions consid-ered necessary to properly plan the audit and significant issues were communicated to the engagement team. [AU-C 300.A21**]

the audit plan is a record of the planned nature, timing, and extent of risk assessment procedures and further audit procedures at therelevant assertion level in response to the assessed risks. [AU-C 300.A22**]



II. AUDIT AREAS

Highest Risk Audit Areas

Consider the firm’s risk assessments identified in the engagement profile and your review of the financial statements and completion of section I, “General Audit Planning Procedures,” to identify, in column 1 that follows, the highest risk audit areas to be reviewed. Ordinarily, a scope of at least three areas is expected. Risk area selection is a matter of professional judgment which may include consideration of the scope and results of other engagements evaluated in the peer review; however, the bolded entries in column 1 would normally be considered highest risk audit areas in employee benefit plan audits.

Review the planning and risk assessment documentation for each risk area selected. Indicate your assessment of the firm’s performance related to elements in columns 2–4. [AU-C 300–315]

Highest RiskAudit Areas1

(1)

Adequate Audit Risk

Identification? (2)

Planned Audit Response Adequate?

(3)

Was the Risk Assessment Adequately

Documented? (4)

Yes No Yes No Yes No

Audit Area

Non-Interest Bearing Cash

Participant Data and Participant Allocations

Investments and Investment Income (Including Interest Bearing Cash)

Contributions Received and Related Receivables

Receivables (Other Than Con-tributions Receivable)

Property and Equipment Used in Plan Operations

Liabilities

Benefit and Claims Payments

Administrative Expenses

Plan Obligations

Commitments and Contingencies

Other Considerations

If any “No” answers are identified in the preceding matrix for which a Matter for Further Consideration (MFC) form was not generated, include an explanation in section V, “Explanation of ‘No’ Answers and Other Comments.”

1 Indicate with a checkmark.



Review the work performed in the highest risk audit areas identified in the matrix and complete only those sections of the subsequent checklist. In the audit areas reviewed, indicate whether the reviewed firm has obtained sufficient com-petent evidential matter to form conclusions concerning the validity of the assertions of material significance embod-ied in the financial statements as described in AU-C section 500, Audit Evidence (AICPA, Professional Standards).

Ques. N/A‡ Yes No| | Ref.

Non-Interest Bearing Cash:

Selected audit area

Does the audit documentation indicate that the following were consid-ered? [AU-C 500, 505, and 230] A201

Confirmation of cash balances

Confirmation of liabilities and contingent liabilities to banks

Were reconciling items cleared by reference to subsequent statements obtained either directly from the bank or from the client and appropriate-ly tested? A202

Was due consideration given to cash transactions shortly before and shortly after the balance-sheet date to determine that transactions wererecorded in the proper period? A203

Was adequate work performed and documented to support the conclu-sions about this audit area? A204

Participant Data and Participant Allocations:

Selected audit area

Has the auditor ascertained that participant data was appropriately audit-ed? [AAG-EBP 5.122, 6.175e, and 7.214e] A205

Did the auditor adequately test eligibility, terminations, and forfeitures? A206

For participant data, did the audit procedures appropriately consid-er and test demographic data, payroll data for one or more pay pe-riods and for a number of participants, and benefits data? [AAG-EBP 5.149, 6.147, and 7.179] A207

For defined benefit plans, did the auditor compare participant data with information given to the actuary to compute the benefit obliga-tion? [AAG-EBP 6.175e] A208

For defined contribution plans, did the auditor apply appropriate proce-dures related to individual accounts? Consider the following: A209

Allocation of income or loss, appreciation or depreciation in value of investments, administrative expenses, and forfeitures[AAG-EBP 5.122a]

For plans with participant directed contributions, determiningwhether individual contributions are being credited to the prop-er participant accounts and to the investment medium selectedby the participant, if applicable [AAG-EBP 5.122d–e]

‡ The “N/A” column should be used when the item either does not exist or is not material. | | All “No” answers should be handled in either of the following ways: (1) discussed on an MFC form with the MFC form number noted in the “Ref.” column or (2) discussed on the pages provided at the end of this checklist if no MFC form was generated.



Ques. N/A Yes No Ref. For defined contribution plans, is the testing of company and indi-vidual contributions and demographic data used to determine eligibil-ity and vesting to individual participant accounts appropriate? [AAG-EBP 5.153] A210

For defined contribution plans, does the sum of the participant accounts reconcile with the total net assets available for plan benefits? [AAG-EBP 5.122f]? A211

For multiemployer plans, were procedures applied to participant data, as appropriate? Consider the following: A212

Were employer contribution reports compared to participantdata? [AAG-EBP 5.158e and 6.151i]

If participant data cannot be reviewed, were other proceduresperformed? [AAG-EBP 5.159–.160 and 6.152–.153]


Investments and Investment Income (Including Interest Bearing Cash):

Selected audit area

Did the auditor obtain sufficient appropriate audit evidence to pro-vide reasonable assurance that fair value measurements (includingappropriate leveling) and disclosures in the financial statements arein conformity with generally accepted accounting principles (GAAP)?(Also see fair value measurement questions EB419–EB422.) [AAG-EBP 8.125j] A214

For limited-scope audits, did the auditor apply appropriate procedures?Consider the following: A215

Was there a certification obtained for investment information? [AAG-EBP 8.163–.165]

Were the audit procedures performed in all areas except invest-ments? [AAG-EBP 8.163–.165]

Was the investment information certified regarding completeness and accuracy and prepared by a bank, similar institution, or insur-ance carrier that is regulated, supervised, and subject to periodicexamination by a state or federal agency? [AAG-EBP 11.57–.71]

For full scope audits:

For plan investments, did the audit procedures provide a reasonable basis for the auditor’s conclusions? Consider the following: A216

Did the audit procedures include obtaining an understanding ofthe plan’s investment strategy and assessing the inherent risk ofthe investments held by the plan? [AAG-EBP 8.106]

Was there analysis of changes in investments during the period?[AAG-EBP 8.125a]

Were there situations in which the plan’s investments might violate applicable laws or regulations? [AAG-EBP 8.125l]

For assets in a discretionary trust, was there an understanding ofthe related internal control sufficient to support transactionsexecuted by the trust? [AAG-EBP 8.12]




Was there evidence regarding the existence and ownership of in-vestments through direct confirmation (including securities in trans-it) and review for liens or other security interest? [AAG-EBP 8.125b] A217

Was there testing of investment transactions, including accrued in-come? [AAG-EBP 8.125e and 8.125i] A218

Was there testing of the fair value of investments at the end of the plan year, including the net change in appreciation or depreciation?[AAG-EBP 8.125e and 8.125j] A219

For investments in a common or collective trust, were audit proceduresadequate? Consider the following: A220

Confirming units of participation held by the plan [AAG-EBP 8.133a]

Examining supporting documentation for unit value information[AAG-EBP 8.133b]

For investment arrangements with insurance companies did the auditorapply appropriate procedures? Consider the following: A221

Contracts between the contract holder and the insurance com-pany [AAG-EBP 8.139a]

Evidence regarding the existence and ownership of the contract,contributions, premium payments, and income credits, such as by direct confirmation and other means [AAG-EBP 8.139c]

Unusual circumstances which may affect the market value ofthe contract [AAG-EBP 8.139d]

Tests of the individual securities or other investments that com-prise the assets underlying synthetic guaranteed investment con-tracts [AAG-EBP 5.141]

For deposit administration contracts, interest credited in relationto minimum guaranteed interest [AAG-EBP 8.140a]

Rate of return for immediate participation guarantee contracts [AAG-EBP 8.140b]

Rates in annuity purchases consistent with contract stipulations[AAG-EBP 8.140c]

Reading the financial statements of the insurance company[AAG-EBP 8.140d]

Expenses charged to the contract in accordance with stipula-tions [AAG-EBP 8.140e]

Investments made in separate or pooled separate accounts[AAG-EBP 8.141–.142]

Did the audit procedures applied to the other types of investments con-sider investments in real estate, loans, and mortgages? [AAG-EBP 8.157] A222

For derivative financial instruments, hedging activities, or investmentsecurities, did the auditor apply the appropriate procedures? Consider thefollowing: A223

Did the auditor obtain an understanding of the company’s inter-nal control sufficient to [AU-C 315]




— identify the types of potential misstatements of specific fi-nancial statement assertions (existence, completeness, rightsand obligations, valuation, and presentation and disclosure)?

— consider factors that affect the risk that the misstatements would be material to the financial statements?

— design tests of controls, when applicable?

Did the auditor use assessed risk of material misstatement about derivatives and investment securities to determine the nature, timing, and extent of the substantive procedures that are respon-sive to that risk? [AU-C 330.22]


Contributions Received and Related Receivables

Selected audit area

For employer and employee contributions, did the auditor apply adequate procedures? Consider the following: A225

Obtaining a list of participating employers (in a multiemployerplan) and testing its completeness by examining appropriate plan documents. [AAG-EBP 5.158b and 6.151b]

Obtaining a schedule of contributions received or receivableand relating the contributions to the listing of participating em-ployers and of other plans under reciprocal arrangements.[AAG-EBP 5.158c and 6.151c]

Testing contribution reports to see that the reports are arithmeti-cally correct and that the contribution rate specified in the planinstrument, including collective bargaining agreements, if ap-plicable, was used. [AAG-EBP 5.153i, 6.151e, and 7.178a]

Reconciling contributions received to the plan’s cash receipts records and bank statements or trustee reports. [AAG-EBP 5.152b, 6.146b, and 7.178c]

Testing postings from the employer contribution reports to theparticipant employee or employer records and from participantrecords to contribution reports. [AAG-EBP 5.152b]

Confirming directly with contributors amounts received andreceivable. [AAG-EBP 5.158d and 6.151h]

Reviewing criteria used by the plan in accruing employer andemployee contributions receivable and determining that theaccruals have been recorded in accordance with GAAP. [AAG-EBP 5.152i, 6.146f, and 7.178f]

Evaluating the reasonableness of the plan’s allowance for esti-mated uncollectible amounts based on testing of collectionssubsequent to the date of the financial statements and reviewingthe status of unpaid amounts. [AAG-EBP 5.152k, 6.146i, and 7.178h]

For a defined benefit pension plan or a defined benefit health and wel-fare plan, did the auditor apply appropriate procedures? Consider thefollowing: A226

Determining that employer contributions are consistent with thereport of the plan’s actuary, if applicable [AAG-EBP 6.146d]




Reviewing the amount contributed and, if applicable, determin-ing that it meets the requirements of the funding standard ac-count. [AAG-EBP 6.146d]

Considering the results of the auditing procedures for partici-pants’ data and using the work of an actuary when examiningthe amount recorded as contributions in the plan’s financial statements. [AAG-EBP 6.146f]

Reconciling contributions to Schedule SB or MB (Form 5500) or with the records of the plan sponsors. [AAG-EBP 6.146c]

Determining that contributions are reflected in the proper periodin accordance with GAAP. [AAG-EBP 6.146f]

For defined contribution plans, did the auditor apply appropriate proce-dures? Consider the following: A227

Reviewing the contribution provisions of the plan instrument andtesting compliance with the plan instrument. [AAG-EBP 5.153g]

Comparing the amount of employer contributions recorded inthe plan’s records to the amount approved by the board of direc-tors of the plan sponsor, if the plan instrument requires that theboard of directors determine or approve the employer contribu-tion. [AAG-EBP 5.152d]

Considering, whether forfeited nonvested participant accounts,if any, have been properly applied to reduce employer contribu-tions, if appropriate, under provisions of the plan. [AAG-EBP 5.152g]

Considering, if applicable, the results of the auditing proceduresfor participants’ data (including any contributions for salary reduction plans, and employees, retirees and COBRA [Consoli-dated Omnibus Budget Reconciliation Act] participants for health and welfare plans). [AAG-EBP 5.152e]

Inquiring about the timeliness of employee contribution remit-tances to the plan and, if necessary, applying additional auditprocedures. Failure of the plan sponsor to remit employee contri-butions to the plan in accordance with Department of Labor(DOL) regulations may constitute a prohibited transaction.[AAG-EBP 5.152l]


Receivables (Other Than Contributions Receivable):

Selected audit area

Did the auditor apply appropriate procedures to confirm or evaluate re-ceivables balances? Consider the following: A229

Were amounts receivable from brokers for securities sold con-firmed and appropriate follow-up steps taken, including secondrequests and alternate procedures? [AU-C 505.07]

If a significant number and amount of receivables were not con-firmed, is there evidence that alternative auditing procedureswere performed? [AU-C 330.20]

Were the results of confirmation and alternative proceduressummarized and were appropriate conclusions included in theaudit documentation? [AU-C 230.08]




If accounts receivable confirmations were not requested, has theauditor documented how the presumption for such requests wasovercome and were the reasons appropriate? [AU-C 330.20]

Was the reasonableness of allowances for doubtful accounts covered inthe audit documentation and collectability of receivables adequately con-sidered? [AU-C 540.12–.14] A230


Property and Equipment Used in Plan Operations:

Selected audit area

Do tests appear adequate and were proper conclusions drawn with respectto property, plant, and equipment balances? Consider the following: A232

Was a summary schedule prepared to show beginning balances,changes during the period and ending balances of property andequipment used in operations and the related accumulated de-preciation?

Were there additions (for example, by examining supportingdocuments or physical inspection)?

Were there retirements?

Was there adequacy of the current and accumulated provisions for depreciation?

Was there consideration of asset impairment including the sta-tus of idle facilities? [FASB ASC 360-10]

Does the audit documentation indicate that the auditor considered thepossibility that property was subject to liens? A233


Liabilities:

Selected audit area

Were liabilities (including payables for securities purchased) tested ade-quately for existence? Consider the following: A235

Was an adequate search performed for unrecorded liabilities atthe balance sheet date?

Was consideration given to expenditures and expenses thatmight require accrual (for example, third-party service providerfees) and to whether accrued expenses were reasonably stated?[FASB ASC 420-10, 710-10, and 715-10]

Were significant notes and bonds payable, together with interestrates and repayment periods, confirmed or were alternative pro-cedures performed?

Were procedures performed to determine whether the carryingvalue of notes payable reflects the present value of the consid-eration received at the appropriate interest rate?

Does the audit documentation indicate that the auditor reviewed compli-ance with the covenants of the entity’s debt obligations? A236





Benefit and Claims Payments:

Selected audit area

Does the audit documentation indicate that the auditor reviewed the cri-teria used by the plan to record benefit payments and determined that thebenefit payments have been recorded in accordance with GAAP? [AAG-EBP 5.178, 6.168, and 7.195–.196] A238

For selected participants receiving benefit payments, did the auditorapply adequate procedures regarding examining the participant’s filefor type and amount of claim and propriety of required approvalsincluding tracing approval of benefit payments to board of trustees oradministrative committee minutes, if applicable. For health and wel-fare benefit plans, examining service provider statements or otherevidence of service rendered and application of stop loss reimburse-ments? [AAG-EBP 5.178a, 6.168a, 7.195d, and 7.196a] A239

For selected participants receiving benefit payments, did the auditorapply adequate procedures regarding evaluating the participant’s orbeneficiary’s eligibility, recomputing benefits based on the plan in-strument and related documents, option elected, vesting provisions,and pertinent service or salary history? [AAG-EBP 5.178a, 6.168a, 7.195d, and 7.196a] A240


Administrative Expenses

Selected audit area

Are administrative expenses in accordance with the plan document, ser-vice provider agreements, properly classified, and recorded in appropri-ate amounts and periods? [AAG-EBP 5.182a, 6.171a, and 7.203a ] A242

Consider if the auditor gained an understanding of the components ofadministrative expenses and if material then [AAG-EBP 5.182b–f, 6.171b–f, and 7.203b–f] A243

analyzed the account and examined supporting invoices, docu-

ments, and computations;

reviewed the terms of the plan instrument and the minutes to

determine if the expenses were properly authorized;

reviewed and tested the contract to determine if the servicescontracted for were performed and that payments were in ac-cordance with the terms of the contract when a contract admin-istrator is employed;

reviewed the allocation to determine it was appropriate and thatthe method of allocation selected was approved by the board orcommittee when expenses are allocated because they are notdirectly associated with a specific plan; and

determined that fees charged by trustees, investment advisors,

and others are in accordance with the respective agreements.





Plan Obligations

Selected audit area

For defined benefit plans, did the auditor obtain an understanding of theactuary’s objectives, scope of work, methods and assumptions, and con-sistency of application? [AAG-EBP 6.175b] A245

For defined benefit plans, did the auditor test the reliability and com-pleteness of the participant census data and plan asset data used by theactuary in the actuarial valuation? [AAG-EBP 6.175e] A246

For health and welfare benefit plans, did the auditor apply appropriateprocedures? Consider the following: A247

Claims information [AAG-EBP 7.207a]

Claims incurred but not recorded [AAG-EBP 7.207b]

Premiums paid to the insurance company were for the properamount and any obligation for unpaid insurance premiums hasbeen properly recorded [AAG-EBP 7.207c]

Actuary’s data [AAG-EBP 7.214]

Assets of more than one plan held in a 501(c)(9) voluntary em-ployees' beneficiary association (VEBA) trust [AAG-EBP 7.05–.07 and 7.148–.153]

Commitments and Contingencies:

Selected audit area

Does the audit documentation contain evidence that the auditor per-formed adequate procedures related to commitments and contingencies?Consider the following: A248

Inspection of minutes of meetings of relevant committees orboards

Inspection of contracts, loan agreements, leases, and corre-spondence from taxing and other governmental agencies, andsimilar documents

Other contingent liabilities or possible guarantees

Have all material contingencies been properly considered, documented,and reported? [FASB ASC 450, Contingencies] A249


Other Considerations:

Selected audit area

Did the auditor apply procedures applicable to other significant audit areas? Consider the following: A251

Employee Retirement Income Security Act of 1974 (ERISA)requirements, applicable sections of the Internal Revenue Code(IRC), related DOL and IRS regulations, and the potential effecton the plan [AAG-EBP appendix A]

Risk areas, such as valuation of nonreadily marketable securitiesor specialized investments [AAG-EBP 8.153–.158]




Plan transactions with parties in interest including a basis foridentification, understanding, and evaluation of parties in inter-est [AAG-EBP 2.98–.107]

Review of the tax status of the plan and IRS tax ruling or de-termination letters [AAG-EBP 9.27–.30]

If the plan is subject to unrelated business income tax or couldbe subject to income tax because of operational errors or otherissues that may affect its tax exempt status, whether the ac-counting and reporting requirements have been met [FASB ASC 740, Income Taxes; AAG-EBP 9.14–.19 and 9.27h–l]

Administrative expenses [AAG-EBP 5.182, 6.171, and 7.203]

Other information contained in the Form 5500 and whether suchinformation, or the manner of its presentation, is materially in-consistent with information or the manner of its presentationappearing in the financial statements [AAG-EBP 10.03–.06]

Use of actuary’s work, the actuary’s report, and the actuarial methods and assumptions [AAG-EBP 6.175 and 7.214]

Plan provision comparisons to the plan instrument and changesin provisions by the IRC in effect as of the plan year-end [AAG-EBP 9]

In an initial audit of a plan’s financial statements, did the auditor applyappropriate auditing procedures on the beginning balance of net assetsavailable for benefits? [AAG-EBP 2.126–.134] Consider the following: A252

The completeness and accuracy of participant data and recordsof prior years, especially as they relate to participant eligibility,contributions and distributions;

The amounts and types of benefits

The eligibility for benefits

If the auditor concluded that a party in interest transaction resulted in anillegal act, including in-kind contributions of property other than cashthat reduce the sponsor’s obligation to fund the plan in cash, did the audit procedures adequately consider the effect on the financial statements, as well as other aspects of the audit? [AAG-EBP 2.91–.119] A253




III. GENERAL AUDIT PROCEDURES

Ques. N/A‡ Yes No| | Ref. Audit Sampling:

Did the auditor consider the following, with regard to audit sampling: A301

The purpose of the audit procedure and the characteristics of the population from which the sample will be drawn, when designing the audit sample? [AU-C 530.06]

Did the auditor determine the sample size sufficient to reduce sampling risk to an acceptably low level? [AU-C 530.07]

Did the auditor select items for the sample in such a way that the auditor can reasonably expect the sample to be representa-tive of the relevant population and likely to provide the auditor with a reasonable basis for conclusions about the population? [AU-C 530.08]

If the auditor was unable to apply the designed audit procedures, or suitable alternative procedures to a selected item, was the item treated as a deviation from the prescribed control (in the case of tests of controls) or a misstatement (in the case of tests of details)? [AU-C 530.11]

Did the auditor project the results of audit sampling to the population? [AU-C 530.13]

Did the auditor evaluate the results of the sample, including sampling risk, and whether the use of audit sampling has pro-vided a reasonable basis for conclusions about the population that has been tested? [AU-C 530.14]

Substantive Analytical Procedures:

If the auditor used analytical procedures as substantive procedures, did the auditor properly consider professional guidelines regarding suchprocedures? [AU-C 520] Did the auditor A302

determine the suitability of particular substantive analytical pro-cedures for given assertions, taking into account the assessed risks of material misstatement and test of details for these asser-tions? [AU-C 520.05a]

evaluate the reliability of data from which the auditor’s expecta-tion of recorded amounts or ratios is developed? [AU-C 520.05b]

develop an expectation of recorded amounts or ratios and evalu-ate whether the expectation is sufficiently precise to identify amisstatement that, individually or when aggregated with other misstatements, may cause the financial statements to be materi-ally misstated? [AU-C 520.05c]

determine the amount of any difference of recorded amounts from expected values that is acceptable without further investi-gation and compare the recorded amounts with expectations? [AU-C 520.05d]




Ques. N/A Yes No Ref. investigate differences, when the auditor identifies fluctuations

or relationships that are inconsistent with other relevant infor-mation or that differ from expected values by a significantamount, by [AU-C 520.07]

— inquiring of management and obtaining appropriate auditevidence relevant to management’s responses and

— performing other audit procedures, as necessary?

document the following: [AU-C 520.08]

— The expectation of recorded amounts or ratios and thefactors considered in its development when not readilydeterminable from the audit documentation?

— The results of comparison of recorded amounts to expec-tations?

— Additional auditing procedures performed relating to theinvestigation of fluctuations or relationships that are in-consistent with other relevant information or that differfrom expected values by a significant amount and theresults of such additional procedures?

Material Accounting Estimates:

Did the auditor properly consider and document the procedures appliedto material accounting estimates, when applicable? Consider the follow-ing: A303

The auditor should obtain an understanding of the following inorder to provide a basis for the identification of the risks ofmaterial misstatement for accounting estimates: [AU-C540.08]

— The requirements of the applicable financial reportingframework relevant to accounting estimates, includingrelated disclosures.

— How management identifies those transactions, events,and conditions that may give rise to the need for account-ing estimates to be recognized or disclosed in the finan-cial statements.

— How management makes the accounting estimates anddata on which they are based.

The auditor should review the outcome of accounting esti-mates included in prior period financial statements or, whenapplicable, their subsequent reestimation for the purpose of thecurrent period. [AU-C 540.09]

In responding to the assessed risks of material misstatement,the auditor should [AU-C 540.13]

— determine whether events occurring up to the date of theauditor’s report provide evidence regarding the account-ing estimate;

— test how management made the accounting estimate andthe data on which it is based;



Ques. N/A Yes No Ref. — test the operating effectiveness of the controls over how

management made the accounting estimate, together withappropriate substantive procedures; and

— develop a point estimate or range to evaluate manage-ment’s point estimate.

If management has not adequately addressed the effects ofestimation uncertainty on the accounting estimates that giverise to significant risks, the auditor should, if considered neces-sary, develop a range with which to evaluate the reasonable-ness of the accounting estimate. [AU-C 540.16]

Representation Letters:

Did the auditor obtain written representations from management with appropriate responsibility for the financial statements and knowledge ofthe matters concerned? [AU-C 580] Consider the following: A304

The representation letter was properly dated and covered allperiods referred to in the auditor’s report. [AU-C 580.20]

The letter contains an acknowledgment that management hasfulfilled its responsibility for preparation and fair presentationof the financial statements and for internal controls relevant tothe preparation and fair presentation of the financial state-ments. [AU-C 580.10]

The letter acknowledges that management has provided theauditor with all relevant information and access and all trans-actions have been recorded and are reflected in the financialstatements [AU-C 580.11g]

The letter disclosed management’s representations related tothe following: [AU-C 580.12]

— Fraud [AU-C 580.12]

— Laws and regulations [AU-C 580.13]

— Litigation and claims [AU-C 580.15]

— Related party transactions [AU-C 580.17]

— Subsequent events [AU-C 580.18]

The letter provides representations about whether managementbelieves the effects of uncorrected misstatements are immate-rial to the financial statements as a whole. A summary of suchitems should be included, or attached to, the written represen-tation. [AU-C 580.14]

If the auditor determines that it is necessary to obtain one ormore written representations to support other audit evidencerelevant to the financial statements or more specific assertionsin the financial statements, the auditor should request suchother representations. [AU-C 580.19]

In addition, did the representation letter include, as applicable, repre-sentations regarding [AAG-EBP 10.22] A305

whether financial circumstances are strained with disclosure ofmanagement’s intentions and the plan’s ability to continue as agoing concern?

if the plan sponsor has not utilized the services of a lawyer?

whether the work of a specialist has been used by the plan?




whether receivables have been recorded in the financial state-

ments?

whether plan management has apprised the auditor of all com-munications, whether oral or written, with regulatory agenciesconcerning the operation of the plan?

whether management’s intention is not to terminate benefit-

responsive investment contracts?

the impact of new accounting standards?

management’s responsibility for the presentation of the sup-

plementary information?

amendments made to the plan instrument, trust agreement, orinsurance contracts during the year, including amendments tocomply with applicable laws?

the methods and significant assumptions used result in a meas-ure of fair value appropriate for financial measurement and dis-closure purposes?

all required filings with the appropriate agencies have been

made?

whether the plan (and the trust established under the plan) isqualified under the appropriate IRC section and intends to con-tinue as a qualified plan (and trust)?

whether the plan has complied with the fidelity bonding re-

quirements of ERISA?

whether the plan has complied with the DOL’s regulationsconcerning the timely remittance of participants’ contributionsto trusts containing assets for the plan?

whether subsequent events require adjustment to the fair valuemeasurements and disclosures included in the financial state-ments other than normal market fluctuations?

If a representation made by management is contradicted by other auditevidence, did the auditor investigate the circumstances and consider thereliability of the representation made? [AAG-EBP 10.20–.21] A306

Compliance With Laws and Regulations:

If the auditor’s procedures disclosed instances or indications ofnoncompliance with laws and regulations, did the auditor apply proce-dures and evaluate the results of those procedures in accordance with professional standards? [AU-C 250] Consider the requirements for theauditor to A307

follow up in accordance with professional standards. [AU-C

250.17–.20]

report the noncompliance with laws and regulations to thosecharged with governance in accordance with professionalstandards. [AU-C 250.21–.23]

document a description of the identified or suspected noncompli-ance with laws and regulations and the results of discussionswith management and, when applicable, those charged with gov-ernance and other parties inside or outside the entity. [AU-C 250.28]



Ques. N/A Yes No Ref. Going Concern Considerations:

Did the auditor consider if there was substantial doubt about the plan’sability to continue as a going concern for a reasonable period of time?[AU-C 570.03–.04] A308

If the auditor believed that there was substantial doubt about the plan’sability to continue as a going concern for a reasonable period of time,did the auditor perform appropriate procedures? [AU-C 570] Consider if A309

the auditor obtained information about management’s plansthat are intended to mitigate the effect of such conditions orevents and evaluate the likelihood that such plans could be im-plemented effectively? [AU-C 570.08–.11]

the auditor documented [AU-C 570.22]

— the conditions or events that led to the belief that there issubstantial doubt about the plan’s ability to continue as a going concern for a reasonable period of time?

— the elements of management’s plans that the auditor con-sidered to be particularly significant to overcoming the ad-verse effects of the conditions or events?

— the auditing procedures performed and evidence obtainedin connection with the auditor’s evaluation of manage-ment’s plans?

— the auditor’s conclusions about whether substantial doubt about the plan’s ability to continue as a going concern fora reasonable period of time remains or is alleviated?

— the consideration and effect of the auditor’s conclusion on

the financial statements, disclosures, and the audit report?

the auditor’s substantial doubt was alleviated, the auditor con-sidered the need for disclosure of the principal conditions andevents that initially caused the auditor to believe there was sub-stantial doubt together with mitigating factors? [AU-C 570.13]

the auditor’s substantial doubt was not alleviated, the auditor’s report included an emphasis-of-matter paragraph that adequately reflects that conclusion. The auditor’s conclusion should be ex-pressed through the use of the terms substantial doubt and going concern. [AU-C 570.15–.16]

Did the written representations from management include [AU-C 570.14] A310

management’s plans that are intended to mitigate the adverseeffects of conditions or events that indicate there is substantialdoubt about the plan’s ability to continue as a going concernfor a reasonable period of time and the likelihood that thoseplans can be effectively implemented, and

a statement that the financial statements disclose all the mattersof which management is aware that are relevant to the entity’sability to continue as a going concern, including principalconditions or events and management’s plans.



Ques. N/A Yes No Ref. Communication of Internal Control Related Matters:

Did the auditor report matters relating to the internal control to manage-ment and those charged with governance? [AU-C 265] Consider if A311

deficiencies in internal control were identified during the audit,the auditor performed an evaluation of each deficiency to deter-mine, on the basis of the work performed, if the deficiencies constituted significant deficiencies or material weaknesses. [AU-C 265.09]

consideration regarding whether prudent officials, havingknowledge of the same facts and circumstances, would likely reach the same conclusion as the auditor’s classification of thecontrol deficiencies (for instance, material weakness, significantdeficiency, or control deficiency). [AU-C 265.10]

other deficiencies in internal control identified during the auditthat have not been communicated to management by other par-ties and that, in the auditor’s professional judgment, are of suffi-cient importance to merit management’s attention. If otherdeficiencies in internal control are communicated orally, the auditor should document the communication. [AU-C 265.12b]

control deficiencies were determined to be significant deficien-cies or material weaknesses, they were communicated in writingto management and those charged with governance within 60 days following the audit report release date. [AU-C 265.11–.13]

the auditor complied with the requirement not to issue a writ-ten report stating that no significant deficiencies were identi-fied during an audit. [AU-C 265.16]

Did the written communication regarding significant deficiencies andmaterial weaknesses include or state the following: [AU-C 265.14] A312

The purpose of the audit was to express an opinion on the finan-cial statements, but not to express an opinion on the effective-ness of the entity’s internal control over financial reporting.

The auditor is not expressing an opinion on the effectiveness of internal control.

The definition of the term material weakness and, when rele-vant, significant deficiency.

An explanation of potential effects of any significant deficien-cies or material weaknesses.

An appropriate alert restricting the use of the communication.

Subsequent Events:

Did the auditor consider information and apply appropriate professional guidance with respect to events occurring subsequent to the date of theaudit report? [AU-C 560] Consider the following: A313

The auditor considered appropriate procedures regardingevents subsequent to the balance sheet date, through the date ofthe auditor’s report. [AU-C 560.09–10]

The auditor gave appropriate consideration to additional evi-dence that becomes available prior to the issuance of the finan-cial statements. [AU-C 560.12–.14]



Ques. N/A Yes No Ref. If the auditor became aware, subsequent to the report date, of

information that may have existed at the report date and thatmight have affected the audit report on the financial statementshad the auditor then been aware of such information, the audi-tor considered the guidance in professional standards in deter-mining an appropriate course of action and the matter appearsto be properly resolved. [AU-C 560.15–.18]

If there is an indication that the auditor concluded that one ormore auditing procedures considered necessary at the time ofthe audit of the financial statements in the circumstances wereomitted from the audit, the auditor considered the guidance inprofessional standards in determining an appropriate course ofaction and the matter appears to be properly resolved. [AU-C 585]

Communications With Those Charged With Governance:

Did the auditor substantively meet the professional standards regarding auditor communications as follows: A314

Properly determine the appropriate persons within the auditedentity’s governance structure with whom to communicate [AU-C 260.07–.09]

Communicate the following matters to those charged with gov-ernance, when applicable:

— The auditor’s responsibilities for forming and expressing anopinion on the financial statements under the applicablefinancial reporting framework, and that the audit does notrelieve management or those charged with governance oftheir responsibilities. [AU-C 360.10]

— An overview of the planned scope and timing of the audit.

[AU-C 360.11]

— The auditor’s views about qualitative aspects of the entity’s

significant accounting practices. [AU-C 260.12a]

— Any significant difficulties encountered during the audit.

[AU-C 260.12b]

— Any disagreements with management. [AU-C 260.12c]

— Other findings or issues significant and relevant to thosecharged with governance regarding their responsibility tooversee the financial reporting process. [AU-C 260.12d]

— Uncorrected misstatements and the effect they may have onthe auditor’s report. The auditor should identify materialuncorrected misstatements individually and request that theybe corrected.[AU-C 260.13a]

— The effect of uncorrected misstatements related to prior pe-

riods. [AU-C 260.13b]

— Material, corrected misstatements that were brought to theattention of management as a result of audit procedures.[AU-C 260.14a]

— Any significant findings or issues arising from the audit thatwere discussed or communicated to management. [AU-C 260.14b]




— Management’s consultation with other accountants, if any.

[AU-C 260.14c]

— Representations the auditor has requested from manage-

ment. [AU-C 260.14d]

Communicate the form, timing, and expected general content of the auditor’s communication with those charged with govern-ance [AU-C 260.15]

Communicate, in a timely manner, and in writing, the significantaudit findings when, in the auditor’s judgment, oral communica-tion would not be adequate; include in the written communica-tion that it is intended solely for the information and use of thosecharged with governance and management and is not intended to be, and should not be, used by anyone other than these specifiedparties [AU-C 260.16–.17]

Consider whether the two-way communication between the au-ditor and those charged with governance was adequate, and ifnot, evaluate the effect, if any, on the auditor’s assessment of the risks of material misstatement and ability to obtain sufficientappropriate audit evidence and should take appropriate action[AU-C 260.19]

Document whether the information was communicated and if the communication was oral, include when and to whom it wascommunicated [AU-C 260.20]

Audit Documentation:

Has the auditor prepared and maintained audit documentation in ac-cordance with professional standards? [AU-C 230] Consider the fol-lowing requirements: A315

The audit documentation provides evidence of the auditor’sbasis for a conclusion about the achievement of the overallobjectives of the auditor and evidence that the audit was planned and performed in accordance with GAAS and applica-ble legal and regulatory requirements. [AU-C 230.02]

The audit documentation is sufficient to enable an experiencedauditor having no previous connection to the audit to under-stand the nature, timing, and extent of procedures performed;results of the procedures performed; audit evidence obtained;and significant findings or issues arising during the audit, theconclusions reached thereon, significant professional judg-ments made in reaching those conclusions. [AU-C 230.08]

In documenting the nature, timing, and extent of audit proce-dures performed, the auditor should record [AU-C 230.09]

— the identifying characteristics of the specific items or mat-ters tested,

— who performed the audit work and the date such work wascompleted, and

— who reviewed the audit work performed and the date andextent of such review.

For audit procedures related to the inspection of significant contracts or agreements, the auditor should include abstracts orcopies of those contracts or agreements in the audit documenta-tion. [AU-C 230.10]



Ques. N/A Yes No Ref. The auditor should document discussions of significant find-

ings or issues with management, those charged with govern-ance, and others, including the nature of significant findings orissues discussed, and when and with whom the discussionstook place. [AU-C 230.11]

If the auditor departs from a presumptively mandatory GAASrequirement, the auditor documented the justification for thedeparture and how other procedures performed in the circum-stances were sufficient to achieve the intent of that require-ment. [AU-C 230.13]

If the auditor performs new or additional audit procedures or draws new conclusions after the date of the auditor’s report, theauditor should document the circumstances encountered; thenew or additional procedures performed, audit evidence ob-tained, and conclusions reached, and their effect on the audi-tor’s report; and when and by whom the resulting changes toaudit documentation were made and reviewed. [AU-C 230.14]

The auditor should document the report release date in the au-dit documentation. [AU-C 230.15]

The auditor’s documentation was consistent with the assem-bling of the engagement documentation file and completion ofthe administrative process of assembling the audit file on atimely basis, no later than 60 days following the report releasedate. [AU-C 230.16]

The auditor’s documentation established reasonable proceduresfor retention of and access to audit documentation for a periodof at least five years. [AU-C 230.17]

If the auditor finds it necessary to modify existing audit docu-mentation or add new audit documentation after the documen-tation completion date, the auditor should document thespecific reasons for making the change and when and by whomthey were made and reviewed. [AU-C 230.18]

The auditor should adopt reasonable procedures to maintain theconfidentiality of client information. [AU-C 230.19]

A record of the significant changes to the overall strategy andthe audit plan and resulting changes to the planned nature, tim-ing, and extent of audit procedures explain why the significantchanges were made and why the overall strategy and audit planwere finally adopted for the audit. It also reflects the appropri-ate response to the significant changes occurring during theaudit. [AU-C 300.A23**]

Were appropriate procedures applied to accompanying supplementaryinformation [AU-C 725.05.08] and required supplementary infor-mation? [AU-C 730] A316

For the engagement, did the personnel adequately complete all forms,checklists, or questionnaires, if applicable, required by firm policy forthe following areas? [QC 10.35–.51 and 10.A32–.A62] A317

Work program

Disclosure and reporting checklist

Working paper and financial statement reviews



Ques. N/A Yes No Ref. If standardized forms were not used for any of the previously men-tioned areas, is there adequate documentation of these areas? [QC 10.35–.51 and 10.A32–.A62] A318

Were the firm’s guidelines for the form and content of working paperscomplied with? [QC 10.35–.51 and 10.A32–.A62] A319

Supervision and Review:

Did the engagement partner take responsibility for the following: [AU-C 220.17] A320

The direction, supervision, and performance of the audit en-gagement in compliance with professional standards, applica-ble legal and regulatory requirements, and the firm’s policiesand procedures?

The auditor’s report being appropriate in the circumstances?

Did the engagement partner take responsibility for reviews being per-formed in accordance with the firm’s review policies and procedures?[AU-C 220.18] A321

Did the engagement partner, through review of the audit documentationand discussion with the engagement team, determine that sufficientappropriate audit evidence was obtained to support the auditor’s reportissued? [AU-C 220.19] A322

Did the auditor perform substantive procedures relating to the financialstatement closing process, such as agreeing or reconciling the financialstatements with the underlying accounting records and examining ma-terial journal entries and other adjustments made during the course ofpreparing the financial statements? [AU-C 330.21] A323

Based on the audit documentation and discussions with the engagementteam, were all reviewer questions and notes adequately addressed? A324

Did the auditor determine whether uncorrected misstatements were material, either individually or in the aggregate? The auditor shouldconsider the following: [AU-C 450.11] A325

The size and nature of the misstatements, both in relation toparticular classes of transactions, account balances, or disclo-sures and the financial statements as a whole, and the particularcircumstances of their occurrence.

The effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances, ordisclosures and the financial statement as a whole.

Does it appear (lack of contrary evidence) that the firm established poli-cies to assign management responsibilities so that commercial considera-tions did not override the quality of work performed; established policiesand procedures that address performance evaluation, compensation, andadvancement (including incentive systems) with regard to its personnel,in order to demonstrate the firm’s overarching commitment to quality;and provided sufficient and appropriate resources for the development,documentation, and support of its quality control policies and proce-dures? [QC 10.A5] A326



Ques. N/A Yes No Ref. Does it appear engagement personnel (including leased and per diememployees) possessed an appropriate mix of experience or expertise and technical training in relation to the complexity or other requirements of the engagement and the involvement of supervisory personnel? [QC10.31–.34 and 10.A17–.A31] A327

Did the personnel assigned to this engagement appear to be familiar with the applicable professional pronouncements (FASB, AICPA, or any oth-er institutions)? [QC 10.31–.34 and 10.A17–.A31] A328

Were the engagement team’s audit hours reasonable for this engagement(including prior to commencement of field work and during and after completion of field work)? A329

Does it appear that the practitioner in charge of the engagement pos-sessed the following knowledge, skills, and abilities (competencies) tofulfill their responsibilities on the engagement including an understand-ing of the following: [QC 10.A18–.A21 and 10.A24–.A35] A330

The role of the firm’s system of quality control and the AICPA

Code of Professional Conduct

The performance, supervision, and reporting aspects of the

engagement

The applicable accounting, auditing, or attestation professional standards including those standards directly related to the in-dustry in which a client operates

The industry in which a client operates, including the indus-try’s organization and operating characteristics, to identify theareas of high or unusual risk associated with an engagementand to evaluate the reasonableness of industry specific esti-mates

The skills that indicate sound professional judgment

How the organization is dependent on or enabled by infor-mation technologies and the manner in which information sys-tems are used to record and maintain financial information

If required by firm policy, was the staff on this engagement appropri-ately evaluated? [QC 10.32 and 10.A22–.A23] A331

Does it appear that involvement by the owner or partner, manager, and,when applicable, the engagement quality control reviewer was ade-quate and appropriately timed to provide for planning and supervisionas the job progressed? [QC 10.35–.51 and 10.A32–.A62] A332

Were the firm’s guidelines for the performance of an EngagementQuality Review complied with? [QC 10.35–.51 and 10.A32–.A62] A333

If required by firm policy, was an appropriate preissuance review com-pleted and documented? [QC 10.35–.51 and 10.A32–.A62] A334

Were any circumstances noted in which the firm consulted or shouldhave consulted regarding an engagement matter (that is, a complex,unusual, or a technical issue) with individuals within the firm, an exter-nal party, or by researching in applicable professional literature based on the firm’s policies and procedures or when the complexity or nature of the issue warranted consultation? [QC 10.35–.51 and 10.A32–.A62] Consider A335




if an individual was consulted (internally or externally), wasthe consultation done on a timely basis and does it appear he or she was aware of all relevant facts and circumstances?

if professional literature was researched, does it appear theresearch was thorough and the sources consulted were complete, correct, and up to date?

does it appear that the person(s) consulted (internally or extern-ally) or the individual(s) performing the research, or both, hadan appropriate level of knowledge, competence, judgment, and(if applicable) authority?

based on the facts and circumstances, were the firm’s conclu-

sions reasonable and consistent with professional standards?

is the firm’s report, the financial statements, or other infor-mation affected by the matter consistent with the results of theconsultation?

if the engagement records indicated a difference of opinionbetween the engagement personnel, specialist, or other consult-ant, was the difference resolved in accordance with firm policyand was the basis of the resolution appropriately documented?



IV. REPORT AND FINANCIAL STATEMENTS

REPORT AND FINANCIAL STATEMENTS FOR ALL EMPLOYEE BENEFIT PLANS

Note: This is a highly summarized checklist. Reviewers may wish to consult the professional standards cited for

detailed information about the requirements. Bulleted points are generally batched into one question on this checklist. The reviewer should weigh each bullet point separately and in the aggregate when concluding whether the professional standards requirement was met in all material respects. All “No” answers must be thoroughly explained. For additional questions specific to a review of a defined contribution plan, use sub-section A, “Report and Financial Statements for a Defined Contribution Plan.” For additional questions spe-cific to a review of a defined benefit pension plan, use subsection B, “Report and Financial Statements for a Defined Benefit Pension Plan.” For additional questions specific to a review of a health and welfare plan, use subsection C, “Report and Financial Statements for a Health and Welfare Plan.”

Ques. N/A‡ Yes No| | Ref. Auditor’s Report:

If the plan is subject to ERISA and DOL regulations and is required to have an audit, is the auditor independent pursuant to DOL regulations? [29 CFR 2509.75–9] EB401

Does the auditor’s report conform to the AICPA Audit and Accounting Guide Employee Benefit Plans? [AAG-EBP 11] EB402

Is the report dated in conformity with the requirements of professional standards? The audit report should be dated no earlier than the date on which the auditor has obtained sufficient appropriate audit evidence on which to base the auditor’s opinion on the financial statements. (Ap-propriate audit evidence includes evidence that the audit documenta-tion has been reviewed; all the statements that the financialstatements comprise, including the related notes, have been prepared; and management has asserted that it has taken responsibility for those financial statements.) [AU-C 700.41] EB403

Does the report appropriately include the basic elements required under professional standards and is appropriate language used for modifying the report in the circumstances described in such standards? [AU-C700.22–.41 and 705] The report should EB404

be in writing [AU-C 700.22]

include the word independent. [AU-C 700.23]

be addressed as required by the circumstances of the engage-ment. [AU-C 700.24]

identify the entity whose financial statements have been audit-ed, state that the financial statements have been audited, identi-fy the title of each statement that the financial statements comprise, and specify the date or period covered by each finan-cial statement that the financial statements comprise. [AU-C 700.25]

include a section with the heading “Management’s Responsi-bility for the Financial Statements.” [AU-C 700.26]





describe management’s responsibility for the preparation and fair presentation of the financial statements. The description of management’s responsibility should not be referenced to a sep-arate statement by management about such responsibilities, if such a statement is included in a document containing the audi-tor’s report. [AU-C 700.27–.28]

include a section with the heading “Auditor’s Responsibility.” [AU-C 700.29]

state that the audit was conducted in accordance with GAASand should identify the United States of America as the coun-try of origin of those standards. [AU-C 700.31]

include a section with the heading “Opinion.” [AU-C 700.34]

identify the applicable financial reporting framework and its origin. [AU-C 700.36]

be appropriately modified in accordance with professional standards, if applicable [AU-C 705]

If the audit was a limited scope audit permitted by DOL rules and regulations with respect to investment information, was this stated and a disclaimer issued? [AAG-EBP 11.57–.72] EB405

Does the report identify and include an appropriate opinion on supplemental schedules required by ERISA and DOL regulations? (Also see question EB417.) [AAG-EBP 11.18–.23, 11.46–.52, 11.61–.63, and 11.73–.79] EB406

Has the report been appropriately modified for a GAAP departure, GAAS departure, or nondisclosure of prohibited transactions? [AAG-EBP 11.11–.14 and 11.46–.56] EB407

Is the report appropriately modified for financial statements pre-sented on a basis other than GAAP that is acceptable under ERISA or DOL regulations? [AAG-EBP 11.26–.34] EB408

If the entity has made the decision to terminate a plan, has the audi-tor considered the implications of that decision for the auditor’s report? [AAG-EBP 11.84–.86] EB409

If the financial statements of a prior period are presented and have been audited by a predecessor auditor whose report is not presented, and the predecessor auditor’s report on the prior period’s financial statements is not reissued, has the successor auditor included the appropriate refer-ence to the predecessor auditor in an other matter paragraph? [AU-C700.54] EB410

Financial Statements and Footnotes:

General

Are the financial statements suitably titled? [AU-C 800.15 and .24] EB411

Is the accounting appropriate and are the disclosures adequate? Consid-er the following: EB412

Significant accounting policies [Paragraphs 3–6 of FASB ASC 235-10-50]

Accounting changes [FASB ASC 250, Accounting Changes and Error Corrections]




Comparative financial statements [FASB ASC 205-10-45]

Contingencies and commitments [FASB ASC 440, Commitments;FASB ASC 450, Contingencies]

Are the financial statements adjusted (when appropriate) for the effect of subsequent events and do they include disclosure of significant subsequent events, whether or not adjustments were made? [FASB ASC 450-20-25-2 and 855-10; AU 560.01–.09 and 561] EB413

Are adjustments of financial statements for prior periods appropriate? [FASB ASC 250-10; Paragraphs 12–18 of FASB ASC 270-10-45] EB414

Have financial instruments been properly accounted for and reported? Was there exemption from certain required disclosures about financial instruments for certain nonpublic entities? [FASB ASC 825-10-50-3] EB415

Did the plan properly present and disclose significant plan information? Consider the following: EB416

Method and significant assumptions used to determine the fair value of investments and the reported value of insurance con-tracts [FASB ASC 960-325-50-1, 962-325, and 965-325]

Description of the plan including its vesting and benefit provi-sions [Paragraph 1a of FASB ASC 960-205-50, 962-205-50-1, and 965-205-50-1]

Significant plan amendments adopted during the year [Paragraph 1b of FASB ASC 960-205-50, 962-205-50-1, and965-205-50-1]

Funding policy (including changes to the policy, and for ERISA plans, their status with respect to meeting the minimum funding requirement) [Paragraph 1d of FASB ASC 960-205-50; FASB ASC 962-205-50-1 and 965-205-50-1]

Federal income tax status of the plan, including IRS tax ruling or determination letter [Paragraph 1f of FASB ASC 960-205-50; FASB ASC 962-205-50-1 and 965-205-50-1]

Compliance with the ERISA requirement that reports under its jurisdiction must include disclosure of “information concern-ing whether or not a tax ruling or determination letter has been obtained” (which is more than is required by FASB ASC 960,Plan Accounting—Defined Benefit Pension Plans) [Paragraph 1g of FASB ASC 962-205-50; AAG-EBP 5.76i, 6.96h, and 7.150]

For positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly in-crease or decrease within 12 months of the reporting date [FASB ASC 740-10-50-15; AAG-EBP 9.24b]

— the nature of the uncertainty

— the nature of the event that could occur in the next 12 months that would cause the change

— an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made




A description of tax years that remain subject to examination by major tax jurisdictions [FASB ASC 740-10-50-15; AAG-EBP 9.24c]

Interest bearing cash balances are included with investments [FinREC recommendation; AAG-EBP 5.17, 6.18, and 7.34]

Identification of investments that represent 5 percent or more of total net assets, as applicable for the plan [FASB ASC 960-325-50-2 and 962-325-45-7]

Reported related party (party in interest) transactions [AAG-EBP 5.76n and 6.96k; FASB ASC 850-10-50-1]

Prohibited transactions between a plan and a party in interest, including [AAG-EBP 2.94]

— a sale, exchange, or lease of property — a loan or other extension of credit — furnishing of goods, services, or facilities — transfer of plan assets to a party in interest for the use or

benefit of the party in interest — an acquisition of employer securities or real property in

violation of the 10 percent limitation

Loans made to participants outside of the plan that are secured by plan assets

Securities lending transactions [FASB ASC 860, Transfers and Servicing; AAG-EBP 8.76–.80]

Investment contracts as required by Paragraphs 9–19 of FASB ASC 946-210-45 [FASB ASC 960-325, 962-325, and 965-325]

Significant, unusual, or infrequent events or transactions occur-ring after the financial statement date but before issuance of the financial statements [FASB ASC 855-10; Paragraph 1h of FASB ASC 960-205-50; FASB ASC 965-205-50-1]

For risks and uncertainties, disclosures regarding the nature of operations, the use of estimates, certain significant estimates, and current vulnerabilities due to certain concentrations [FASB ASC 275-10-50-1]

For master trusts, a description of the basis used to allocate net assets, net investment income, gains, and losses to participating plans and the plan’s percentage interest in the master trust as of the date of each statement of net assets available for benefits presented [FASB ASC 960-30-50-3 and 962-325-50-8]

For master trusts, the footnotes should include

— a statement of net assets of the master trust. [FinREC rec-ommendation; AAG-EBP 8.47a]

— a statement of changes in net assets of the master trust.[FinREC recommendation; AAG-EBP 8.47b]

— contributions and benefit payments reported as a transfer in or out of the master trust. [FinREC recommendation;AAG-EBP 8.47b]

— master trust investment expense (such as trustee, custodi-an, and investment management fees) and related accruals recorded at the master trust level. [FinREC recommenda-tion; AAG-EBP 8.47b]




— investments greater than 5 percent of master trust net as-sets (recommended when the plan holds an individual in-terest in the master trust). [FinREC recommendation;AAG-EBP 8.47c]

Disclosure of significant plan administration costs that are ab-sorbed by the plan sponsor [Paragraph 1d of FASB ASC 960-205-50; FASB ASC 962-205-50-1 and 965-205-50-1]

Significant terms of expense offset arrangements with third parties whereby expenses are netted against income [FinREC recommendation; AAG-EBP 5.77d, 6.97, and 7.128a]

Information about derivative financial instruments—futures, forwards, swap and option contracts, and other financial in-struments with similar characteristics [FASB ASC 815, Deriv-atives and Hedging]

Description of the policy regarding the purchase of insurance contracts that are excluded from plan assets [Paragraph 1e of FASB ASC 960-205-50]

Material lease commitments, other commitments, or contingent liabilities [Paragraph 1i of FASB ASC 965-205-50]

Restrictions, if any, on plan assets (for example, legal re-strictions on multiple trusts) [Paragraph 1n of FASB ASC 965-205-501]

Disclosures about the nature of plan mergers or spin-offs[AAG-EBP 5.104, 6.111–.112, and 7.138–.139]

Disclosures about the liquidation basis of accounting used for plan terminations [FASB ASC 960-40-25-2, 962-40, and 965-40]

If the plan is subject to ERISA reporting requirements are all of the ap-plicable schedules attached? Consider the following: EB417

Schedule of Assets (Held at End of Year) [AAG-EBP A.52b(v)]

Schedule of Assets (Acquired and Disposed of Within Year) [AAG-EBP A.52b(vi)]

Schedule of Loans or Fixed Income Obligations in Default or Classified as Uncollectible, Schedule of Leases in Default or Classified as Uncollectible, Nonexempt Transactions [AAG-EBP A.52b(i–iii)]

Schedule of Delinquent Participant Contributions [AAG-EBP A.52b(iv)]

Schedule of Reportable Transactions [AAG-EBP A.52b(vii)]

If subject to ERISA and DOL, is there a reconciliation between finan-cial statements and the Form 5500 amounts, if applicable? [AAG-EBP 10.08 and A.52c(viii)] EB418

Fair Value Measurements:

At a minimum, have the following been separately disclosed for each interim and annual period for each class of assets and liabilities measured at fair value in the statement of financial position after initial recognition: (Paragraphs 1–2 of FASB ASC 820-10-50) EB419




For recurring and nonrecurring fair value measurements, the fair value measurement at the end of the reporting period?

For nonrecurring fair value measurements, the reasons for the measurement?

For recurring and nonrecurring fair value measurements, the level of the fair value hierarchy within which the fair value measurement are categorized in their entirety (level 1, level 2, or level 3)?

For assets and liabilities held at the end of the reporting period that are measured at fair value on a recurring basis, the amounts of any transfers between level 1 and level 2 of the fair value hierarchy, the reasons for those transfers, and the report-ing entity’s policy for determining when transfers between levels are deemed to have occurred. Transfers into each level shall be disclosed and discussed separately from transfers out of each level.

For recurring and nonrecurring fair value measurements cate-gorized within level 2 and level 3 of the fair value hierarchy, a description of the valuation technique(s) and the inputs used in the fair value measurement? If there has been a change in the valuation technique, did the entity disclose the change and the reason for making the change?

For fair value measurements categorized within level 3, the quantitative information about the significant unobservable inputs used in the fair value measurement?

For recurring fair value measurements categorized within level 3, a reconciliation from the opening balances to the closing balances, separately disclosing changes attributable to the fol-lowing (disclosures for derivative assets and liabilities may be presented net):

— Total gains or losses for the period recognized in earnings(or changes in net assets) and the line item in which those gains or losses are reported?

— Total gains or losses for the period recognized in other comprehensive income in which those gains or losses are recognized?

— Purchases, sales, issues, and settlements (each type dis-closed separately)?

— The amounts of any transfers in or out of level 3, the rea-sons for those transfers, and the reporting entity’s policy for determining when transfers between levels have oc-curred. Are transfers into level 3 disclosed and discussed separately from transfers out of level 3?

For recurring fair value measurements categorized within level 3, the total gains or losses for the period included in earnings dueto the change in unrealized gains or losses that relate to assets and liabilities held at the end of the reporting period and the line item(s) in the statement of income (or activities) in which those unrealized gains or losses are recognized?

For recurring an nonrecurring fair value measurements categor-ized within level 3, a description of the valuation processes used?




For recurring fair value measurements categorized as level 3, a narrative description of the sensitivity of the fair value meas-urement to changes in unobservable inputs if a change in those inputs to a different amount might result in a significantly higher or lower fair value measurement?

For recurring and nonrecurring fair value measurements, if the highest and best use of a nonfinancial asset differs from its current use, disclosure of that fact and why the nonfinancial asset is being used in a manner that differs from its highest and best use.

For derivative assets and liabilities, did the reporting entity present the fair value disclosures on a gross basis and for the reconciliation disclo-sure on either a gross or net basis? (FASB ASC 820-50-10-3) EB420

Are the quantitative fair value disclosures presented in tabular format? (FASB ASC 820-10-50-8) EB421

If assets or liabilities have been measured at fair value pursuant to thefair value option, does the presentation separate those reported fair val-ues from the carrying amounts of similar assets and liabilities measured using another measurement attribute? (Paragraphs 1–2 of FASB ASC 825-10-45) EB422

Investments in Entities That Calculate Net Asset Value per Share:

Are the following separately disclosed for (a) investments that do not have a readily determinable fair value and (b) investments in investment companies or similar entities that report their investment assets at fair value: (FASB ASC 820-10-50-6A) EB423

Fair value measurement of the investments in the class at the reporting date and a description of the significant investment strategies of the investee(s) in the class?

For classes of investments that includes investments that can never be redeemed with the investee(s), but the reporting entity receives distributions through the liquidation of the underlying assets of the investees, the reporting entity’s estimate of the period of time over which the underlying assets are expected to be liquidated by the investees?

Amount of the reporting entity’s unfunded commitments relat-ed to investments in the class?

A general description of the terms and conditions upon which the investor may redeem the investments in the class?

The circumstances in which an otherwise redeemable invest-ment in the class might not be redeemable?

For those otherwise redeemable investments that are restricted from redemption as of the reporting entity’s measurement date, an estimate of when the restriction from redemption might lapse (if an estimate cannot be made, that fact and how long the restriction has been in effect)?

Any other significant restrictions on the ability to sell the in-vestment in the class at the measurement date?




If it is probable that the reporting entity will sell an invest-ment(s) for an amount different than net asset value per share, the total fair value of all investments that meet this criteria and any remaining actions necessary to complete the sale?

If it is probable that a group of investments will be sold but have not been identified, the plans to sell the investments and any remaining actions necessary to complete the sale?



A. REPORT AND FINANCIAL STATEMENTS FOR A DEFINED CONTRIBUTION PLAN

Section not applicable Ques. N/A‡ Yes No| | Ref.

Financial Statements and Footnotes

General

Have plans been properly accounted for and reported? Consider thefollowing: DC401

Are investments pledged to secure debt disclosed? [Paragraph 1c of FASB ASC 440-10-50]

Are guarantees by others of debt of the plan disclosed?[Paragraph 1h of FASB ASC 962-205-50]

Is there a disclosure of amounts allocated to persons who havewithdrawn from participation in the earnings and operations ofthe plan? Are such amounts excluded from liabilities on thefinancial statements? [Paragraph 1i of FASB ASC 962-205-50]

If a defined contribution plan provides for participant-directed and nonparticipant-directed investment programs, is informationabout the net assets and significant components of the changes innet assets relating to the nonparticipant-directed program dis-closed, with such reasonable detail, in the financial statements oraccompanying notes, as is necessary to identify the types of in-vestments and changes therein? [FASB ASC 962-325-45-8]

In a 403(b) plan, if some or all inactive contracts or accounts thatmet the conditions of DOL Field Assistance Bulletin No. 2009-02 were excluded from the plan, did the auditor consider the ef-fect of the exclusions on the completeness of the financial state-ment presentation and restrictions on the scope of the audit?

Did the plan properly present and disclose significant plan information?Consider the following: DC402

The amount and disposition of forfeited nonvested accounts.Specifically, identification of those amounts that are used to reduce future employer contributions, expenses, or reallocated to participant’s accounts, in accordance with plan documents[Paragraph 1j of FASB ASC 962-205-50]

Investment contracts appropriately considered fully benefit-responsive when all criteria have been met for that contract[FASB ASC glossary term fully benefit-responsive investment contract; FASB ASC 962-325-50-3]

Statement of Net Assets Available for Benefits

If subject to ERISA and DOL regulations, are comparative statements ofnet assets available for benefits presented? [AAG-EBP 5.12] DC403

Are the amounts included in the Statement of Net Assets properly present-ed and are all disclosures included, as applicable? Consider the following: DC404

Participant-directed and nonparticipant-directed investments including those in master trust (identified by type and presentedat fair value) [FASB ASC 962-325-45]





Investment contracts reported at fair value [FASB ASC 962-325]

Insurance contracts [FASB ASC 962-325]

Investment contracts with fully benefit-responsive features as required by paragraphs 9–19 of FASB ASC 946-210-45 [FASB ASC 962-325]

Unallocated insurance contracts reported on in accordance withERISA and DOL [AAG-EBP 8.58]

Participant loans shall be classified as notes receivable fromparticipants for reporting purposes and measured at their unpaidprincipal balance plus any accrued but unpaid interest (should be applied retrospectively to all prior periods presented, effec-tive for fiscal years ending after December 15, 2010) [FASB ASC 962-310-45-2 and 962-310-35-2]

Contributions receivable [FASB ASC 962-310]

Amounts receivable from brokers for securities sold [AAG-EBP 5.58]

Accrued interest and dividends [AAG-EBP 5.58]

Allowance for estimated uncollectible amounts [FASB ASC 962-310-35-1]

Operating assets used in plan operations (for example, buildings,equipment, furniture, fixtures, and leasehold improvements) iden-tified by type and presented at cost, less accumulated deprecia-tion or amortization [FASB ASC 962-205-45-5]

Property and equipment including accounting for the impair-ment of long-lived assets to be held and used, long-lived assets to be disposed of, assets of discontinued operations, and capital-ized interest [FASB ASC 360, Property, Plant, and Equipment]

Notes payable and other debt [FASB ASC 470, Debt] Excess contributions payable [AAG EBP 5.64] Amounts due to brokers for securities purchased [AAG EBP

5.64]

Other terms and covenants [FASB ASC 440-10-50]

Statement of Changes in Net Assets

Are the amounts included in the Statement of Changes in Net Assetsproperly presented and are disclosures adequate? Consider the follow-ing: DC405

Net change in fair value of investments by significant asset type[Paragraph 7a of FASB ASC 962-205-45]

Investment income separate from net appreciation (for example, interest and dividends) [Paragraph 7b of FASB ASC 962-205-45]

Reinvested dividends presented as investment income andshown separately from changes in fair value [FinREC recom-mendation; AAG-EBP 5.68c]

Reinvested capital gain distributions presented as investmentincome and shown separately from changes in fair value or in-cluded as part of the net change in fair value [FinREC recom-mendation; AAG-EBP 5.68c]




Contributions from employer(s), employees, and other identi-fied sources separately stated [Paragraph 7c–e of FASB ASC 962-205-45]

Corrective contributions are presented as other employer contri-butions and any associated receivable presented as an other em-ployer contribution receivable [FinREC recommendation; AAG-EBP 5.54]

Significant rollover contributions, such as a plan sponsor acquisi-tion or other plan amendments, presented as a separate line item[FinREC recommendation; AAG-EBP 5.56]

Payments to insurance companies to purchase contracts excludedfrom plan assets [Paragraph 7g of FASB ASC 962-205-45]

Benefits paid to participants [Paragraph 7f of FASB ASC 962-205-45]

Administrative expenses [Paragraph 7h of FASB ASC 962-205-45]

If material, the following items are separately presented:

— Other income, including fee income from securities loaned and from miscellaneous sources, such as reimbursementsfor lost income and operational defects [FinREC recom-mendation; AAG-EBP 5.70a]

— Interest earned on notes receivable from participants[FinREC recommendation; AAG-EBP 5.70b]

— Income tax expense (for example, unrelated business in-come tax) [FinREC recommendation; AAG-EBP 5.70c]

— Other expenses, such as interest expense on debt or shortsales, bank borrowings, margin accounts, and reverse re-purchase agreements [FinREC recommendation; AAG-EBP 5.70d]

403(b) Plans or Arrangements

Did the auditor perform procedures to determine if the population iscomplete? [AAG-EBP 5.153a] Consider the following: DC406

Terminated participants with account balances in the plan

Participant directed transfers under Revenue Ruling 90-24

Inactive participant accounts with the current vendor(s) or priorvendor(s)

Did the auditor adequately test eligibility for the universal availabilitystandard? [AAG-EBP 5.103] Consider the following list of employees thatmay be excluded from a 403(b) plan: DC407

Employees who will contribute $200 or less annually

Employees who participate in an eligible deferred compensa-tion plan or another tax-sheltered annuity (401(k) or 457 plan)

Nonresident alien

Certain students and employees who work less than 20 hours per week




Did the auditor apply appropriate procedures related to contributions?[AAG-EBP 5.152–.153] Consider the following: DC408

Five-year post severance contributions

Fifteen-year catch up contributions

Are investments properly limited to annuity contracts or custodial ac-counts holding units of participation of regulated investment companies?[AAG-EBP 5.101] DC409

Are participant loans made directly with the insurance company and notfrom the plan, not included in plan assets and are these loans, and thecollateral held by the plan, properly disclosed in the footnotes to the fi-nancial statements? [AAG-EBP 5.146] DC410



B. REPORT AND FINANCIAL STATEMENTS FOR A DEFINED BENEFIT PENSION PLAN


Auditor’s Report

Is the auditor’s report on financial statements of plans appropriatelyworded assuming either an end-of-year benefit information date or be-ginning-of-year benefit information date? [AAG-EBP 11.35–.36] BP401


General

Did the plan properly present and disclose significant plan information?Consider the following: BP402

Method and significant assumptions used to determine the actu-arial present value of accumulated plan benefits including anysignificant changes in the method of assumptions during theyear [Paragraphs 8–9 of FASB ASC 960-20-50]

Benefit priority and pension benefit guarantee coverage in theevent of plan termination [Paragraph 1c of FASB ASC 960-205-50]


If subject to ERISA and DOL regulations, are comparative statements ofnet assets available for benefits presented? [AAG-EBP 6.15] BP403

Are the amounts included in the Statement of Net Assets properly pre-sented and are all disclosures included, as applicable? Consider thefollowing: BP404

Unallocated insurance contracts reported on in accordance withERISA and DOL [AAG-EBP 8.58]

Contributions receivable [FASB ASC 960-310-25]

ERISA minimum required contribution determined by the actu-ary is recorded as a contribution receivable if not paid by year-end [FinREC recommendation; AAG-EBP 6.64]



Have sponsors of defined benefit pension plans properly ac-counted for and disclosed 401(h) accounts in accordance withparagraphs 4–10 of FASB ASC 960-30-45 and paragraphs 4–5 of FASB ASC 960-205-50


Operating assets used in plan operations (for example, buildings,equipment, furniture, fixtures, and leasehold improvements)identified by type and presented at cost, less accumulated depre-ciation or amortization [FASB ASC 960-360]





Property and equipment including accounting for the impair-ment of long-lived assets to be held and used, long-lived assets to be disposed of, assets of discontinued operations, and capital-ized interest [FASB ASC 960-360 and 360]

Notes payable and other debt [FASB ASC 470]

Amounts due to brokers for securities purchased [AAG EBP6.70]



If the benefit information date is as of the beginning of the plan year, isthe Statement of Changes in Net Assets Available for Benefits in com-parative form? [FASB ASC 960-25-45-4] BP405

Are the amounts included in the Statement of Changes in Net Assetsproperly presented and disclosures adequate? Consider the following: BP406

Net change in fair value of investments by significant asset type[Paragraph 2a of FASB ASC 960-30-45]

Contributions from employer(s), employees, and other identi-fied sources separately stated [Paragraph 2c–e of FASB ASC 960-30-45]

Payments to insurance companies to purchase contracts exclud-ed from plan assets [Paragraph 2g of FASB ASC 960-30-45]

Investment income separate from net appreciation (for example,interest and dividends) [Paragraph 2b of FASB ASC 960-30-45]

Reinvested dividends presented as investment income andshown separately from changes in fair value. [FinREC recom-mendation; AAG-EBP 6.73b]

Reinvested capital gain distributions presented as investmentincome and shown separately from changes in fair value or in-cluded as part of the net change in fair value. [FinREC recom-mendation; AAG-EBP 6.73b]

Benefits paid to participants [Paragraph 2f of FASB ASC 960-30-45]

Administrative expenses [Paragraph 2h of FASB ASC 960-30-45]

Statement of Accumulated Plan Benefits

Is information regarding the actuarial present value of accumulated planbenefits as of either the beginning or end of the plan year presented?[Paragraph 1c of FASB ASC 960-205-45] Consider the following: BP407

Is information about the actuarial present value of accumulatedplan benefits presented entirely in the same location, that is,entirely in a separate statement, on the face of another state-ment, or in the notes? [FASB ASC 960-20-45-2]

If information about the actuarial present value of accumulatedplan benefits is presented on the statement of net assets availa-ble for benefits, is the information as of the same date as the statement of net assets available for benefits? [FASB ASC 960-20-45-2]




Is a prior-year statement of net assets and changes presented ifbeginning-of-year benefit information is used? [FASB ASC 960-205-45-4]

Is the total actuarial present value of accumulated plan benefits segment-ed into at least the following categories? [ASB ASC 960-20-45-3] Con-sider the following: BP408

Vested benefits of participants currently receiving payments(including benefits due and payable as of the benefit infor-mation date)

Other vested benefit

Nonvested benefits

Statement of Changes in Accumulated Plan Benefits

Is information about changes in the actuarial present value of accumulat-ed plan benefits presented entirely in the same location, that is, entirelyin a separate statement, on the face of another statement, or in the notes? [FASB ASC 960-20-45-2] Consider the following: BP409

If information about changes in the actuarial present value ofaccumulated plan benefits is presented on the statement of changes in net assets available for benefits, is the informationfor the same period as the statement of changes in net assetsavailable for benefits? [FASB ASC 960-20-45-2]

Did the entity report and properly disclose the changes in accumulated plan benefits? Consider the following: BP410

Are changes in the actuarial present value of accumulated planbenefits including amendments, changes in actuarial assump-tions, and nature of the plan (mergers, terminations or spin-offs) disclosed and accounted for? [FASB ASC 960-20-50-3]



C. REPORT AND FINANCIAL STATEMENTS FOR A HEALTH AND WELFARE PLAN



General

Did the plan properly present and disclose significant plan information? Consider the following: HW401

Method and significant assumptions used to determine claims incurred but not reported (IBNR) and the actuarial present val-ue of accumulated plan benefits including any significant changes in the method of assumptions during the year [FASB ASC 965-30-50-5]

Appropriately considered fully benefit-responsive investment contracts when all criteria have been met for those contracts [FASB ASC 965-325-50-3]

For health and welfare benefit plans providing postretirement health care benefits, is reporting appropriate and are disclosures adequate? Consider the following: HW402

Effect of a 1 percentage point increase in the assumed health care cost-trend rates for each future year on the postretirement benefit obligation [Paragraph 1k of FASB ASC 965-205-50]

Any modification of the existing cost-sharing provisions that are encompassed by the substantive plan(s) and the existence and nature of any commitment to increase monetary benefits provided by the plan and their effect on the plan’s financial statements [Paragraph 1l of FASB ASC 965-205-50]

Termination provisions of the plan and priorities for distribution of assets, if applicable [Paragraph 1m of FASB ASC 965-205-50]

Assumed health care cost-trend rate(s) used to measure the expected cost of benefits covered by the plan for the next year, a general description of the direction and pattern of change in the assumed trend rates thereafter, the ultimate trend rate(s), and when that rate is expected to be achieved [Paragraph 1j of FASB ASC 965-205-50]

Did the plan follow guidance consistent with FASB ASC 965, Plan Accounting—Health and Welfare Benefit Plans? [AAG-EBP 7.20–.25] Consider the following: HW403

Presentation of postretirement benefit obligations information [FASB ASC 965-30-35; FASB ASC 715, Compensation—Retirement Benefits]

Accounting and reporting of postemployment benefit obliga-tions [FASB ASC 965-30-35 and 965-30-25-3]

The measurement date of the plan’s benefit obligation [FASB ASC 965-30-35]





Postretirement benefit obligations, including the disclosure of information about retirees’ relative share of the plan’s estimat-ed cost of providing postretirement benefits [FASB 965-30]

Disclosure of the discount rate used for measuring the health and welfare plan’s obligation for postemployment benefits [FASB ASC 965-30-50-5]

Reporting and disclosures on 401(h) account (if applicable) [Paragraphs 2–4 of FASB ASC 965-205-50]


If subject to ERISA and DOL regulations, are comparative statements of net assets available for benefits presented? [AAG-EBP 7.27a and 7.30a] HW404

Are the amounts included in the Statement of Net Assets properly pre-sented and are all disclosures included, as applicable? Consider the fol-lowing: HW405

Contracts with insurance companies or a bank that incorporate mortality or morbidity risks reported at contract value and other investment contracts reported at fair value [Paragraphs 3–5 ofFASB ASC 965-325-35]

Insurance contracts [FASB ASC 965-365]

Investment contracts with fully benefit-responsive features as required by paragraphs 9–19 of FASB ASC 946-210-45 [FASB ASC 965-365]

Contributions receivable [FASB ASC 965-310]

Employer receivable equal to the liability for claims IBNR for participant claims if, as of the date of the financial statements, a legal or contractual requirement exists for the employer to fund the specific amount [FinREC recommendation; AAG-EBP 7.61]


Amounts receivable from service providers for rebates or re-funds that are contractually due to the plan if collection is probable and the amount can be reasonably estimated [FinREC recommendation; AAG-EBP 7.63]


Properly accounted for and disclosed 401(h) accounts in ac-cordance with FASB ASC 965-205


Operating assets used in plan operations (for example, buildings, equipment, furniture, fixtures, and leasehold improvements)identified by type and presented at cost, less accumulated depre-ciation or amortization [FASB ASC 965-360-35-1]

Property and equipment including accounting for the impairment of long-lived assets to be held and used, long-lived assets to be disposed of, assets of discontinued operations, and capitalized interest [FASB ASC 360-10-50-2, 205-20-50, and 835-20]




Notes payable and other debt [FASB ASC 470-10-50-1]

Amounts due to brokers for securities purchased [AAG-EBP 7.72]


Are the disclosures adequate concerning the following, if significant? HW406

Accrued experience, including rating adjustments, insurance premiums payable, deposits with insurance companies, and accumulated eligibility credits [FASB ASC 965-310-50 and965-30-35-1]

For insured health and welfare plans, are claims payable and currently due and claims by eligible participants IBNR excluded from benefit obligations of the plan? [AAG-EBP 7.90] HW407

For self-funded health and welfare plans, is the cost of IBNR measured at the present value, as applicable, of the estimated ultimate cost to the plan settling the claims? [AAG-EBP 7.93] HW408


Are the amounts included in the Statement of Changes in Net Assets properly presented and are disclosures adequate? Consider the follow-ing: HW409

Net change in fair value of investments by significant asset type [FASB ASC 965-325-45]

Contributions from employer(s), employees, and other identi-fied sources separately stated

Payments to insurance companies to purchase contracts

Investment income separate from net appreciation (for exam-ple, interest and dividends)

Reinvested dividends presented as investment income and shown separately from changes in fair value [FinREC recom-mendation; AAG-EBP 7.74f]

Reinvested capital gain distributions presented as investment income and shown separately from changes in fair value or included as part of the net change in fair value. [FinREC rec-ommendation; AAG-EBP 7.74f]

Benefits and claims paid to participants Premiums paid

Stop-loss premiums paid, whether by the plan or plan sponsor, recorded as an expense [FinREC recommendation; AAG-EBP 7.80]

Administrative expense

Statement of Benefit Obligations

Is information regarding the plan’s benefit obligations as of the end of the plan year presented in a statement of plan benefit obligations, a statement of benefit obligations and net assets available for benefits, or in the notes to the financial statements? (All of the information must be in one place.) [Paragraphs 1–2 of FASB ASC 965-205-45] HW410




Statement of Changes in Benefit Obligations

Is information regarding changes in the plan’s benefit obligations for the plan year presented in a statement of changes in plan benefit obliga-tions, in a statement of changes in benefit obligations and net assets available for benefits, or in the notes to the financial statements? (All of the information must be in one place.) [FASB ASC 965-205-45-1] HW411

Do the changes in benefit obligations include, as a minimum, changes resulting from the following? [FASB ASC 965-30-45-6] HW412

Plan amendments

Changes in the nature of the plan (mergers and spinoffs)

Changes in actuarial assumptions



V. EXPLANATION OF “NO” ANSWERS AND OTHER COMMENTS

The following pages are provided for your comments on all “No” answers for which a Matter for Further Consid-eration form was not generated or to expand upon any of the “Yes” answers. All “No” answers must be thoroughly explained and reviewed with the engagement owner.

Question Disposition Number Explanatory Comments of Comments#

What is the systemic cause, if any, of the matters identified including your discussion with the engagement partner or owner and his or her view of the cause of the matters?

If any of the bolded questions (A121, A207, A208, A210, A214, A217, A218, A219, A239, A240, EB405, EB406, EB407, EB408, or EB409) were answered “No,” but you were able to conclude that the firm performed or re-ported on this engagement in conformity with applicable professional standards in all material respects, please explain why.

# The nature of the disposition of comments may vary, such as note “resolved” and the manner of resolution; and note “not significant” to indicate a “No” answer is appropriate, but that the manner is not significant enough to warrant the preparation of an

MFC form.



VI. CONCLUSIONS

Explain the reasons for any “Yes” answers. BE SPECIFIC.

Based on the work performed, did anything come to your attention that caused you to believe that

the firm did not perform the engagement in all material respects in accordancewith GAAS (including documentation)? [AU-C 230; ET 202] YES** NO

the auditor’s report was not appropriate in the circumstances? YES** NO

the financial statements did not conform with GAAP (or when applicable, a spe-cial purpose framework2) in all material aspects and the auditor’s report was notappropriately modified? [AU-C 585; ET 203] YES** NO

the practitioner in charge of the engagement did not have the knowledge,skills, and abilities (competencies) to perform it in accordance with professionalstandards? YES** NO

the firm did not comply with its policies and procedures on this engagement in allmaterial aspects? YES** NO

Explanation of “Yes” answers:

[The next page is 20,700A-1.]

** If this question is answered “Yes,” see additional guidance contained in Interpretations 66-1 and 67-1, “Concluding on the Review of an Engagement,” in section 2000 in the AICPA Peer Review Program Manual. 2 The cash, tax, regulatory, and other bases of accounting that utilize a definite set of logical, reasonable criteria that is applied to all material items appearing in financial statements are commonly referred to as other comprehensive bases of accounting.

Documents

Employee Benefit Plan Audit Engagement Checklist … · 00-8 JAN 2014 Employee Benefit Plan Audit Engagement Checklist (Ending on or After December 15, 2012) 20,701 AICPA Peer Review