Congress does not repeal limited-scope pension audits.
Currently, the Employee Retirement Income Security Act of 1974 (ERISA) allows the pension plan administrator to elect to exclude from the audit the plan assets that are held in financial institutions. If the administrator chooses to have a limited-scope audit, the independent auditors cannot express an opinion on the plank financial statements. Plan administrators elect limited-scope audits for approximately half of all pension plan audits.
The American Institute of CPAs argued that restricted pension plan audits provided no assurance about the fair presentation of financial statements and their conformity with generally accepted accounting principles. In a letter to be sent to members of Congress, J. Thomas Higginbotham, AICPA vice-president-congressional and political affairs, said the amendmenr to repeal limited-scope audits would provide cost-effective assurance that pension plan participants knew their plans' financial positions.
The amendment to repeal the provision met with strong opposition by some business associations, such as the National Association of Manufacturers and the Investment Company Institute, which argued that the costs of full-scope pension audits would be extremely expensive and a burden on plan sponsors. Higgenbotham, disagreeing about the costs, said the benefits of the assurances outweighed the incremental cost involved. The AICPA said it would continue to pursue a repeal of the limited-scope audit provision next congressional session.
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|Publication:||Journal of Accountancy|
|Article Type:||Brief Article|
|Date:||Dec 1, 1996|
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