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State Board Report

July 2015

The May 2015 report from the Office of the Chief Accountant, Employee Benefits Security Administration (EBSA), U.S. Department of Labor (see SBR 6/15) on the quality of employee benefit plan audits performed by independent qualified public accountants was "a call to action," NASBA Executive Vice President and COO Colleen K. Conrad told the NASBA Regional Meetings. "A positive outcome of this is that the DOL now recognizes that the State Boards have been left out of the equation. Very few referrals have gone to the Boards," she stated.

All State Boards will be receiving a letter from the DOL as part of the EBSA’s initiative to communicate the results of the study and ensure that only competent CPAs are performing these audits. Out of 400 plan audits sampled from 2011 Form 550 filings, the EBSA found approximately 4 out of 10 audits contained major deficiencies. Looking at similar studies done in previous years, the EBSA has found a negative trend in the percentage of deficiencies. Ms. Conrad said, "The report expresses concern that peer review and practice monitoring efforts are not improving audit quality or identifying deficient audits."

Over the last 10 years, only 89 referrals were made by the DOL to specific State Boards, NASBA Legal Counsel Maria L. Caldwell stated. "Many states have not received even one referral from DOL over the last years. When Boards have received referrals, they have taken appropriate action."

Ms. Caldwell said the specifics are being worked out for the DOL to request consent agreements from firms to share its investigative information with the State Boards, and a similar information sharing strategy is being developed with the AICPA. Details on these cooperative programs when finalized will be provided to the State Boards.

"The key to effective enforcement will be having detailed information shared with the State Boards," Ms. Caldwell stated.

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