Introduction

The Department of Labor oversees many aspects of labor and employment, as illustrated by this organizational chart. One division of the DOL, the Employee Benefits Security Administration (EBSA), deals specifically with the protection of employee benefit plans.

The EBSA was created under the ERISA Act of 1974 in order to protect financial plans created for the benefit of employees and their beneficiaries.

Employee Benefit Plan Audits are typically very complex, existing in a highly regulated environment of DOL, IRS, and other regulations. An unacceptable percentage of plan audits fail to meet professional standards each year. The firms which perform a substantial amount of work dealing with ERISA audits tend to comply with the applicable standards. By comparison, the majority of violations are committed by practitioners who only perform a small number of ERISA audits and are therefore less familiar with the applicable standards.

Enforcement Process

The DOL is engaged in an ongoing program to evaluate the quality of employee benefit plan audits. Their responsibility extends to more than 6,000 CPA firms who audit in excess of 80,000 retirement and welfare benefit plans. The DOL uses a variety of strategies to review audit work. They conduct firmwide, more holistic inspections of firms with large benefit plan practices and review engagements of a sample of firms with smaller practices.

Audit work that fails to meet professional and regulatory standards may result in the rejection of the client’s Form 5500 Annual Report filing and the referral of the CPA to their state board of accountancy and the AICPA’s Professional Ethics Division. Prior to 2015, the DOL referral process included state boards of accountancy only to the extent that the AICPA did not have jurisdiction. Since 2015, the applicable state board of accountancy is an addressee on each such referral.

Information Sharing

The DOL may share limited information regarding its inspection with the appropriate board of accountancy and the AICPA, provided the licensee has signed a consent with the DOL. However, the DOL does not share detailed information on its inspection with the appropriate board.

For cases the AICPA is investigating, or has investigated, the board may gain access to the AICPA’s investigatory files in one of two ways:

Option 1 – With Cooperative Enforcement Agreement:

1. A Cooperative Enforcement Agreement is in place between the AICPA and the respective board of accountancy.
2. The board sends the firm/CPA an AICPA Consent Form for signature. Once the signed consent is received, the AICPA may share information with the board during and upon conclusion of the investigation.
3. The board agrees to wait until the AICPA completes its investigation before beginning a board investigation.
4. The board may use AICPA files and consider its conclusions in making its assessment.

Download the AICPA Cooperative Enforcement Agreement

Option 2 – Without Cooperative Enforcement Agreement

1. The board learns of the AICPA’s investigation.
2. The AICPA investigation has been completed.
3. The board sends the firm/CPA a consent agreement, with wording to include, “I hereby authorize the American Institute of Certified Public Accountants (AICPA) to provide the (name of the state board of public accountancy) with all information concerning the AICPA’s investigation of the above-referenced matter.”
4. Upon receipt of the signed consent from the firm or CPA, the board forwards a copy of the consent to the AICPA and the files are released within days of receipt of the consent by the AICPA.

Most Boards are authorized to request such information from their licensees, and can also discipline the licensee solely upon a failure to cooperate with the Board in such situations.

For assistance with an AICPA Cooperative Enforcement Agreement or consent form, please contact NASBA’s Regulatory Affairs Manager at regulatoryaffairs@nasba.org.

Helpful Links for DOL

> Listing of Regional Offices
> Consent Form

Contacts

Michael Auerbach, Acting Chief Accountant
U.S. Department of Labor – Employee Benefits Security Administration
200 Constitution Ave. NW, Suite 400
Washington, DC 20210

Tel (202) 693-8363
Fax (202) 693-8697

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