The American Institute of Certified Public Accountants (AICPA) Auditing Standards Board (ASB) recently enacted the most sweeping changes to its employee benefit plan audit requirements in more than two decades. In July 2019, the ASB issued its transformative Statement on Auditing Standards (SAS) 136, “Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA” (codified as AICPA, Professional Standards, AU-C 703). SAS 136 is effective for audits of Employee Retirement Income Security Act of 1974 (ERISA) plan financial statements for periods ending on or after Dec. 15, 2021. While the new SAS does not affect the accounting or financial statement reporting for plans, it will affect every other aspect of the audit, including engagement acceptance, the audit opinion, audit procedures, and required communications at the conclusion of the audit.
Following is information about the new preconditions for engagement acceptance required by SAS 136, which represent the most pressing issue for management as it prepares for upcoming 2021 calendar year-end audits.