Compliance April 21, 2017

New Standards for ERISA Plan Financial Audits Proposed

The proposal would amend various other sections in AICPA Professional Standards.
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The AICPA’s Auditing Standards Board has issued Exposure Draft, “Proposed Statement on Auditing Standards (SAS), Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA,” specific to audits of financial statements of employee benefit plans that are subject to the Employee Retirement Income Security Act (ERISA).

The proposed SAS addresses the auditor’s responsibilities to form an opinion and report on the financial statements of ERISA plans, and the form and content of such reporting, including reporting on specific plan provisions relating to the ERISA plan financial statements and reporting when management imposes a limitation on the scope of the audit in accordance with ERISA section 103(a)(3)(C).

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For audits of ERISA plan financial statements only, this proposed SAS would apply in place of AU-C section 700, “Forming an Opinion and Reporting on Financial Statements,” and paragraph .09 of AU-C section 725, “Supplementary Information in Relation to the Financial Statements as a Whole.”

The proposed SAS also would amend various other AU-C sections in AICPA Professional Standards. Proposed amendments include:

  • Engagement acceptance requirements in addition to AU-C section 210;
  • New performance requirements that serve as a basis for a new reporting requirement, “Report on Specific Plan Provisions Relating to the Financial Statements;”
  • New required procedures when the ERISA-permitted audit scope limitation is imposed;
  • Written management representations in addition to AU-C section 580;
  • Considerations relating to the Form 5500 filing, which the auditor’s report accompanies;
  • Expanded description of management’s responsibilities;
  • Expanded communication on the ERISA supplemental schedules;
  • New form and content requirements of the auditor’s report when management instructs the auditor to limit the scope of the audit, as permitted by ERISA, including expanded auditor’s responsibilities relating to the certified information; and
  • Required emphasis-of-matter paragraphs.

The proposed SAS would be effective for audits of financial statements for periods ending on or after December 15, 2018. The comment period ends on August 21.

In Practice April 21, 2017

Benefits and Limits of Social Media Marketing

Advisers widely like to use social media to cultivate client relationships—but they see limits on the value of social media interactions, with the vast majority passing on premium social media marketing services. 
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Nearly half of advisers (46%) have successfully turned a social media contact into a real customer, according to American Century Investments’ Seventh Annual Financial Professionals Social Media Adoption Study.

Most of the new deals reached were small, with 23% of all advisers saying they posted a deal via social media pathways valued at less than $1 million. Just 4% report winning a deal valued at more than $5 million for the business through social media connections.

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A majority of advisers (55%) feel that being connected with an individual or company on a social media network increases the chance of doing business with that entity in the foreseeable future. Forty-three percent feel there is little impact, and just 2% suggest pre-existing social media connections make establishing a business relationship more difficult.

As advisers might expect, the research shows Facebook is more popular for personal use, while LinkedIn is more popular for business-related use. Interestingly, slightly more advisers (24%) report using Facebook for both personal and business purposes, compared with 21% who use LinkedIn that way.

Advisers cite a laundry list of benefits seen from embracing social media for business purposes, although generally only about one-quarter of advisers cites each of these: “Increased my visibility in the marketplace; enhanced my profile with clients; enhanced my business knowledge; improved my referrals or opened a door that otherwise had been closed; shared insights with clients and prospects; attracted new clients; and retained clients more easily.”

Firms cite ancillary benefits from social media engagement in the form of gaining better access to expert commentary/insights, viewing more news/content relevant to clients, and getting to know prospects in a more personal way. Important to note, however, 23% of firms say they are not seeing any positive business changes attributable to using social media.

The American Century Investments research goes on to suggest relatively few advisers feel compelled to invest in paid marketing services offered by Facebook, LinkedIn and other sources. A whopping 75% of advisers do not use such services, and another 5% are unsure to what extent their firm is paying for social media marketing.

An infographic summarizing key findings is available for download here. 

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