Description
Book SynopsisThe most hands-on and authoritative guide to conducting 401(k) plan audits In the newly revised second edition of Audits of 401(k) Plans, a team of expert authors from the renowned ???Big Four??? firm Deloitte and Touche delivers an essential and practical guide for auditors engaged in the 401(k) plan audits. Readers will learn to move effectively and efficiently through audits of these popular employee benefit plans and gather strategies and techniques compliant with the Employee Retirement Income Security Act (ERISA) and SEC rules. This latest edition provides the latest updates to FASB Accounting Standards, SEC regulations, and regulatory changes under all relevant legislation. It???s an indispensable handbook for practicing auditors who seek to responsibly discharge their duties in 401(k) audits.
Table of ContentsChapter 1 1-1
Introduction and Background 1-1
Background information 1-3
Operation and administration 1-6
Accounting records 1-8
Reporting standards 1-10
Governmental regulations 1-11
Audit requirements 1-12
Reporting and disclosure requirements under ERISA 1-16
SEC Form 11-K filing requirements 1-17
ERISA limited-scope audits 1-19
Chapter 2 2-1
Planning 2-1
Pre-engagement activities 2-3
Audit planning 2-6
Communication and coordination 2-10
Understanding the plan and its environment, including its internal control 2-11
Audit documentation 2-13
Preliminary analytical review procedures 2-14
Audit risk factors 2-15
Internal control structure 2-21
Consideration of fraud 2-22
Plan’s use of third-party service organizations 2-29
Party in interest transactions 2-30
Plan’s use of voice response or internet recordkeeping system 2-32
Accounting estimates 2-33
Going concern considerations 2-34
Chapter 3 3-1
Internal Control Structure 3-1
Understanding internal control 3-4
The components of internal control 3-6
Acquiring knowledge of the controls 3-9
Assessing control risk 3-10
Plan’s use of third-party service organizations 3-11
Plan’s use of voice response and internet-based recordkeeping systems 3-16
Documentation 3-17
Communicating control deficiencies 3-18
Chapter 4 4-1
Auditing the Statement of Net Assets Available for Benefits 4-1
Accounting guidance 4-3
Listing of investments 4-4
Valuation of investments 4-5
Investment options 4-6
Audit objectives 4-8
Audit procedures 4-9
Investments in master trusts and similar vehicles 4-11
Investments in registered investment companies (mutual funds) and common or commingled trust funds 4-13
Investments with insurance companies 4-15
Direct filing entities (DFE) 4-20
Other investments 4-21
ERISA limited-scope auditing procedures 4-24
Contributions receivable 4-26
Notes receivable from participants receivable 4-27
Cash balances 4-29
Other assets 4-30
Accrued liabilities 4-31
Chapter 5 5-1
Auditing the Statement of Changes in Net Assets Available for Benefits 5-1
Investment income 5-3
ERISA limited-scope audit 5-7
Investment expenses 5-8
Contributions from employers 5-9
Individual participant accounts 5-12
Participant eligibility 5-17
Contributions from other identified sources 5-18
Withdrawals 5-19
Loans 5-20
Administrative expenses 5-22
Chapter 6 6-1
Other Auditing Considerations 6-1
Plan tax status 6-2
Testing for discrimination 6-7
Consequences of violations 6-8
Failure to pass nondiscrimination tests 6-9
Commitments and contingencies 6-10
Subsequent events 6-12
Representations from plan management 6-14
Illustrative attachment to management representation letter 6-18
Form 5500 and supplemental schedules 6-21
Information for supplemental schedules from trustee or custodian 6-28
Terminating plans 6-32
Plan mergers 6-35
Party in interest transactions 6-36
Initial audit of the 401(k) plan 6-41
Form 11-K: The Sarbanes-Oxley Act of 2002 6-44
Communication with those charged with governance 6-47
Chapter 7 7-1
The Auditor’s Report and Financial Statement Disclosures 7-1
The auditor’s report 7-4
Standard report 7-7
Additional communications: Emphasis-of-matter and other-matter paragraphs 7-10
Modified reports 7-12
Non-GAAP basis financial statements 7-14
Reports filed pursuant to the SEC Form 11-K 7-16
ERISA limited-scope reports 7-21
Financial statement disclosures 7-24
Appendix A A-1
ERISA and Related Regulations A-1
Appendix A A-3
Glossary Glossary 1
Index Index 1
Solutions Solutions 1
Chapter 1 Solutions 1
Chapter 2 Solutions 4
Chapter 3 Solutions 6
Chapter 4 Solutions 8
Chapter 5 Solutions 10
Chapter 6 Solutions 12
Chapter 7 Solutions 17
