AICPA Answers Questions on 403(b) Plan Audits

March 9, 2010 ( – The American Institute of Certified Public Accountants (AICPA) has issued guidance addressing the impact of Department of Labor relief on annual financial reporting for 403(b) plans.

A FAQ document, 403(b) Retirement Plan Audits-Frequently Asked Questions, prepared by the AICPA’s 403(b) Plan Audit Task Force, helps plan administrators and auditors understand the impact of DoL Field Assistance Bulletins (FABs) on requirements for large ERISA-covered 403(b) plans to submit audited financial statements to the DoL beginning with 2009 plan year Form 5500 filings.

DoL FAB 2009-02, Annual Reporting Requirements for 403(b) Plans (see DoL Provides Relief on Form 5500 Reporting for 403(b) Plans), allows plans to exclude certain custodial accounts and annuity contracts from the reporting, and FAB 2010-01, Annual Reporting and ERISA Coverage for 403(b) Plans (see EBSA Offers Form 5500 Guidance for 403(b) Plans), provides additional guidance on that relief.

The AICPA notes that ERISA requires plan auditors to follow professional standards and report on whether the plan’s financial statements are consistent with generally accepted accounting principles (GAAP). “The DoL enforcement relief allows plan administrators to disregard contracts that are excluded under the relief, but by law auditors cannot disregard incomplete financial statements because ERISA requires the audit reports to identify whether the financial statements are prepared in accordance with GAAP,” said Bob Lavenberg, partner with BDO Seidman LLP, and chair of the AICPA’s 403(b) Plan Audit Task Force, in a press release. “Despite the very best efforts of plan administrators and vendors to establish proper accountability for plan assets, auditors may still need to modify their reports under the law. The DoL recognizes this constraint in ERISA and has said it will not reject a modified audit report if the sole reason was because of the plan administrator’s election of the Department’s enforcement relief.”

Ian MacKay, Director of the AICPA Employee Benefit Plan Audit Quality Center adds: “In deciding whether to elect to exclude contracts and accounts under the DoL’s enforcement relief, the plan administrator will want to understand the impact on the auditor’s report. The auditor’s report will also depend on other factors including whether the plan administrator elects the limited scope audit exemption under ERISA, whether sufficient records exist for reported contracts and accounts, and whether other GAAP departures are noted by the auditor.”

Recently, Lavenberg and MacKay shared with PLANSPONSOR (b)lines readers what 403(b) plan sponsors can expect from auditors during their plan financial audit (see Know What to Expect in Your 403(b) Plan Financial Audit).  

The FAQ document can be found on the AICPA Employee Benefit Plan Audit Quality Center’s (EBPAQC) online 403(b) Plan Resource Center at