New AICPA Technical Questions and Answers
The AICPA has released new Technical Questions and Answers (TQAs) for Section 6935, SSAE No. 16 Reports – Employee Benefit Plans, renamed as Multiemployer Plans, and Section 7200, Partnerships. Further, certain TQAs were transferred from Section 6935 to Section 6933, Auditing Employee Benefit Plans.
AICPA’s Technical Questions and Answers include guidance in applying AICPA standards but are not themselves sources of established authoritative principles.
Auditing Employee Benefit Plans
The AICPA moved TQA Sections 6935.01 and .02 to Section 6933.11, “Audit Procedures When SSAE No. 16 Reports Are Not Available” and 6933.12, “Allocations Testing of Investment Earnings When a Type 2 SSAE No. 16 Report Is Available.” Section 6933.11 discusses the applicable audit procedures for an audit of a plan if the service organization does not provide the plan with a type 1 or type 2 service auditor’s report, as described in Statement on Standards for Attestation Engagements (SSAE) No. 16, Reporting on Controls at a Service Organization (AICPA, Professional Standards, AT sec. 801).
Section 9633.12 discusses how extensively the allocation of investment earnings at the participant level should be tested in plan audits in which the auditor uses a type 2 SSAE No. 16 report.
The AICPA issued new TQAs concerning multiemployer plan payroll compliance services. The new TQAs are:
- TQA section 6935.03, “Multiemployer Plan Payroll Compliance Services—Engagement Letter;”
- TQA section 6935.04, “Multiemployer Plan Payroll Compliance Services—Representation Letters From Engaging Party;”
- TQA section 6935.05, “Multiemployer Plan Payroll Compliance Services—Representations Not Obtained From Responsible Parties;” and
- TQA section 6935.06, “Multiemployer Plan Payroll Compliance Services—Use of AUP or Other Reports as Audit Evidence.”
In addition to the TQAs on multiemployer plans, the AICPA also issued new TQA Section 7200.09, “Tax Accounting Considerations Under Partnership Audit Regime” on how a partnership should account for payments to the Internal Revenue Service (IRS) for previous underpayments of tax, interest, and penalties. The question is really whether the underpayment represents an income tax of the partnership or the partners.
The TQA provides that as the IRS audit regime treats the collection of tax from the partnership as a mere administrative convenience on the part of the government to collect the underpayment of income taxes from the partners in previous periods, income taxes on partnership income, regardless of when paid, should continue to be attributed to the partners. The partnership would not apply the accounting model under FASB Topic 740, Income Taxes, to account for amounts it pays to the IRS for previous underpayments of tax, interest, and penalties. The payment made by the partnership should be treated as a distribution from the partnership to the partners in the financial statements of the partnership.
The new AICPA’s Technical Questions and Answers are available on CCH Accounting Research Manager as follows:
TQA Sections 6933.11 and 6933.12:
TQA Sections 6935.03 through 6935.06:
TQA Section 7200.09: