The AICPA has recently released the new Audit and Accounting Guide for Employee Benefit Plans. New items contained within the audit guide are as follows:
- A new chapter (Chapter 9) specifically dedicated to accounting and auditing for multiemployer plans,
- Appendix A – Regulations, administration, and operations of a multiemployer plan, and,
- Appendix B – Payroll compliance audit function.
The purpose of payroll audits is to fulfill the fiduciary responsibility of the Plan Trustees to collect contributions, protect the plan and their participants. Payroll audits can be performed by the Plan’s auditors, other outside individuals who perform payroll compliance procedures, in-house compliance personnel or internal auditors. While payroll audits have always been required for multiemployer plans, the new audit guide has enhanced and changed some of the Plan’s audit requirements that are required to be followed by the Fund auditor.
Some changes that you may encounter in future audits are as follows:
- Request the plan administrator to obtain copies of the payroll auditor’s workpapers
- Examine those workpapers to validate the conclusions reached by the payroll audit function
- Reperform a sample of payroll audits
In reviewing the payroll audit workpapers, the Fund Auditor needs to consider whether the workpapers demonstrate an understanding of the collective bargaining agreement, plan documents, the industry, and the participating employer. The payroll audit workpapers also need to demonstrate the payroll auditor’s thought process in conducting the payroll audit and show an understanding of how the employer’s payroll system operates, being able to identify covered and non-covered employees, being able to demonstrate that the procedures were designed to identify error or deficiencies, ensure that the employer provided all requested records and conclude on the accuracy of the employer’s payroll records and the remittance reports submitted.
In conclusion, your Fund auditors will be required to perform more audit procedures over payroll audits and obtain much more documentation from the payroll audit than in the past. Have discussions now with your payroll auditors to ensure the information will be available.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.
