Is Information Certified by an Agent Good Enough?


Is Information Certified by an Agent Good Enough?

Back in 2002, the Employee Benefit Security Agency (EBSA) researched if information certified by an agent was accurate. It was a given that banks, similar institutions and insurance companies could certify the accuracy and completeness of records, thereby enabling a plan to have a limited audit rather than a full scope audit based on the wording within ERISA.

As could be expected, many plans preferred a limited scope audit as it reduced the cost of the engagement. In 2002, the AICPA Employee Benefit Plan Expert Panel raised several questions and circumstances in which they wanted regulatory guidance. (Just imagine what would have occurred if the AICPA had advised it’s members to accept agent certifications and the DOL didn’t agree with that position.)

The general theme of the questions was: Could a recordkeeper, who is an affiliate of a qualified entity, give an acceptable certification?

EBSA ruled that such a certification could be accepted if “the party providing the certification [is] in fact authorized to represent the insurance carrier, bank or similar institution holding the assets of the plan.”

At the same time, EBSA clearly stated, “It is the responsibility of the administrator to determine whether the conditions for limiting the scope of an accountant’s examination have been satisfied.” If there are any questions about whether the party, that issued the certification, was an authorized representative of the qualified entity, the administrator must take the necessary steps to resolve the issue.

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