GBA/RPA 3
Plan management responsibilities listed in an audit engagement letter: - CORRECT
ANSWER-- understanding the objective of the audit
- the plan's financial statements and the selection and application of the accounting
policies
- establishing and maintaining effective internal control over financial reporting
- designing and implementing programs and controls to prevent and detect fraud
- identifying and ensuring that the plan complies with the laws and regulations
applicable to its activities
- making all financial records and related information available to the auditor
- adjusting the financial statements to correct material misstatements
An audit engagement letter from the independent qualified public accountant (IQPA)
should include, among other things: - CORRECT ANSWER-- the objective and scope of
the engagement
- a statement that due to the inherent limitations of an audit, there is a risk that material
misstatement may not be detected
- identification of the applicable financial reporting framework
- reference to the expected form and content of reports to be issued
- a statement that circumstances may occur in which a report may differ from its
expected form and content
- a list of matters regarding the various responsibilities of plan management and the
auditor
Plan auditors responsibilities detailed in an audit engagement letter: - CORRECT
ANSWER-- conducting the audit in accordance with GAAS
,- obtaining reasonable rather than absolute assurance about whether the financial
statements are free of material misstatement, whether caused by error or fraud
- obtaining an understanding of the plan and its environment, including its internal
controls, sufficient to assess the risks of material misstatement of the financial
statements and design the nature, timing and extent of further audit procedures
- the expression of an opinion on the plan's financial statements
The main disclosure requirements under ERISA are: - CORRECT ANSWER-- a plan
document must exist for each plan
- a summary plan description (SPD) must be furnished automatically to participants
- a summary of material modifications (SMM) must be furnished automatically when a
plan is amended
- a four-page summary of benefits and coverage (SBC) must be provided to applicants
and enrollees before enrollment or reenrollment
- copies of certain plan docs must be furnished to participants and beneficiaries upon
written request
- claim procedures must be established and followed when processing benefits claims
and when reviewing appeals of denied claims
The main disclosure requirements for ERISA plan assets are: - CORRECT ANSWER--
plan assets, including participant contributions, may be used only to pay plan benefits
and reasonable admin costs
- for some plans, plan assets may be held in trust
- a fidelity bond must be purchased to cover every person who handles plan funds
DOL defines a material reduction in a health plan as any modification or change that: -
CORRECT ANSWER-- eliminates benefits payable under the plan
- reduces benefits payable under the plan (Ex: from a change in formulas,
methodologies or schedules that serve as the basis for benefit determination)
- increases deductibles, copayments or other amounts paid by a participant or
beneficiary
- reduces the service area covered by a health maintenance organization (HMO)
, - establishes new requirements (Ex: preauthorization requirements) to obtain services
or benefits
SPDs and SMMs must be furnished in a manner "reasonably calculated to ensure
actual receipt of the material". Acceptable methods include: - CORRECT ANSWER-- in-
hand delivery to employees
- first-class mail
- second or third-class mail, but only if return and forwarding postage is guaranteed and
address correction is requested
- inclusion in a union or company publication, but only if certain requirements are met
- disclosure to participants (both employees and non-employees) may be made
electronically
Basic rules for presenting the SBC to entitled parties: - CORRECT ANSWER-- must be
presented in a uniform format
- utilize terminology understandable by the average plan participant
- not exceed four pages in length
- not include print smaller than 12-point font
ER contributions toward health insurance must be made under a plan to be free from
FICA and FUTA taxation. A plan exists if any of the following requirements are met: -
CORRECT ANSWER-- the plan is in writing and copies of the plan details are made
available to EEs either in print or electronically by e-mail
- the plan is referred to in an employment contract
- the ER can document that employees contribute to the plan
- ER contributions are kept in a separate account from the ER's salary account
- the ER is required to make the contributions
Coverage types and arrangements that need not be reported on a W-2 form: -
CORRECT ANSWER-- long-term care coverage
- HIPAA "excepted benefits" and dental or vision plan coverage that is not part of a
group health plan
- MSAs, HSAs and HRAs
Plan management responsibilities listed in an audit engagement letter: - CORRECT
ANSWER-- understanding the objective of the audit
- the plan's financial statements and the selection and application of the accounting
policies
- establishing and maintaining effective internal control over financial reporting
- designing and implementing programs and controls to prevent and detect fraud
- identifying and ensuring that the plan complies with the laws and regulations
applicable to its activities
- making all financial records and related information available to the auditor
- adjusting the financial statements to correct material misstatements
An audit engagement letter from the independent qualified public accountant (IQPA)
should include, among other things: - CORRECT ANSWER-- the objective and scope of
the engagement
- a statement that due to the inherent limitations of an audit, there is a risk that material
misstatement may not be detected
- identification of the applicable financial reporting framework
- reference to the expected form and content of reports to be issued
- a statement that circumstances may occur in which a report may differ from its
expected form and content
- a list of matters regarding the various responsibilities of plan management and the
auditor
Plan auditors responsibilities detailed in an audit engagement letter: - CORRECT
ANSWER-- conducting the audit in accordance with GAAS
,- obtaining reasonable rather than absolute assurance about whether the financial
statements are free of material misstatement, whether caused by error or fraud
- obtaining an understanding of the plan and its environment, including its internal
controls, sufficient to assess the risks of material misstatement of the financial
statements and design the nature, timing and extent of further audit procedures
- the expression of an opinion on the plan's financial statements
The main disclosure requirements under ERISA are: - CORRECT ANSWER-- a plan
document must exist for each plan
- a summary plan description (SPD) must be furnished automatically to participants
- a summary of material modifications (SMM) must be furnished automatically when a
plan is amended
- a four-page summary of benefits and coverage (SBC) must be provided to applicants
and enrollees before enrollment or reenrollment
- copies of certain plan docs must be furnished to participants and beneficiaries upon
written request
- claim procedures must be established and followed when processing benefits claims
and when reviewing appeals of denied claims
The main disclosure requirements for ERISA plan assets are: - CORRECT ANSWER--
plan assets, including participant contributions, may be used only to pay plan benefits
and reasonable admin costs
- for some plans, plan assets may be held in trust
- a fidelity bond must be purchased to cover every person who handles plan funds
DOL defines a material reduction in a health plan as any modification or change that: -
CORRECT ANSWER-- eliminates benefits payable under the plan
- reduces benefits payable under the plan (Ex: from a change in formulas,
methodologies or schedules that serve as the basis for benefit determination)
- increases deductibles, copayments or other amounts paid by a participant or
beneficiary
- reduces the service area covered by a health maintenance organization (HMO)
, - establishes new requirements (Ex: preauthorization requirements) to obtain services
or benefits
SPDs and SMMs must be furnished in a manner "reasonably calculated to ensure
actual receipt of the material". Acceptable methods include: - CORRECT ANSWER-- in-
hand delivery to employees
- first-class mail
- second or third-class mail, but only if return and forwarding postage is guaranteed and
address correction is requested
- inclusion in a union or company publication, but only if certain requirements are met
- disclosure to participants (both employees and non-employees) may be made
electronically
Basic rules for presenting the SBC to entitled parties: - CORRECT ANSWER-- must be
presented in a uniform format
- utilize terminology understandable by the average plan participant
- not exceed four pages in length
- not include print smaller than 12-point font
ER contributions toward health insurance must be made under a plan to be free from
FICA and FUTA taxation. A plan exists if any of the following requirements are met: -
CORRECT ANSWER-- the plan is in writing and copies of the plan details are made
available to EEs either in print or electronically by e-mail
- the plan is referred to in an employment contract
- the ER can document that employees contribute to the plan
- ER contributions are kept in a separate account from the ER's salary account
- the ER is required to make the contributions
Coverage types and arrangements that need not be reported on a W-2 form: -
CORRECT ANSWER-- long-term care coverage
- HIPAA "excepted benefits" and dental or vision plan coverage that is not part of a
group health plan
- MSAs, HSAs and HRAs
