How to Prepare for Benefits Plan Audit Investment Certifications

The presence of an investment certification can change the entire audit plan. Be sure to get your certification and make sure it is valid before your audit begins.

The most important thing to consider when preparing for your benefits plan audit is determining which type of audit to choose. There are two types of checks in place for an employee benefit plan. Both of these types were previously called “full scope” or “limited scope” audits. However, with the introduction of Auditing Standards Statement 136 (“SAS 136”): Formulation of an opinion and report on the financial statements of employee benefit plans subject to ERISAthe two types of audits are now renamed ERISA Non-Section 103(a)(3)(C) audits and ERISA Section 103(a)(3)(C) audits, respectively.

The type of audit plan that management may choose depends on whether the investments are held at a qualified institution that can provide appropriate certification that the investment information is complete and accurate. It is important to note that the plan administrator is responsible for determining if certification is appropriate. A plan administrator who receives appropriate certification is eligible to elect an ERISA Section 103(a)(3)(C) audit. In this case, the plan administrator will instruct the auditor not to perform audit procedures on the investment information that has been certified. Therefore, the primary benefit of an ERISA 103(a)(3)(C) audit is that it reduces the time and resources that would otherwise be required to audit plan investments.

Appropriate certification is essential to elect an ERISA Section 103(a)(3)(C) audit. Some of the requirements to consider are:

  • Only a qualified institution can certify. A qualified institution is a bank, trust company, insurance company, or similar institution regulated, supervised, and subject to periodic review by a state or federal agency.
  • The certification is signed by a person authorized to represent the qualified establishment.
  • The certification specifies the name of the plan.
  • The certification(s) cover the entire audit period.
  • The certification covers both the completeness and accuracy of investments and related investment activities.
  • Certification includes all plan investments.

Previously, if plan management opted for a limited scope audit, the auditor issued a disclaimer opinion. Now, with SAS 136, if plan management elects an ERISA Section 103(a)(3)(C) audit, the auditor will issue an unmodified opinion on audit areas that are not certified (for example, member data, contributions, benefit payments), and the auditor may perform limited procedures on investments.

Where investments are not held at a qualified institution or where certification is not appropriate, an ERISA Non-Section 103(a)(3)(C) audit would be requested by the plan administrator. Additionally, when a company allows its employees to invest their 401(k) deferrals in company stock, an ERISA Non-Section 103(a)(3)(C) audit would be required to accompany the filing 11- K, regardless of whether appropriate certification is provided.

Below is an example of an ERISA Section 103(a)(3)(C) audit scope certification that complies with the requirements of 29CFR 2520.103-5c. Source: AICPA Employee Benefit Plan Audit Quality Center.



  • Prepared by a qualified institution (or authorized agent).
  • Specifies the plan name.

D: XYZ Profit Sharing and 401(k) Plan and Trust

Shut in are the certified statements of trust for the above plan(s) for the following periods:

  • Certified Declaration of Trust Covering the annual period until 31/12/20xx; and
  • Certified Declaration of Trust from 01/01/20xx to 31/12/20xx.

ABC National Bank hereby certifies that the information provided pursuant to 29CFR2520.103-5c is complete and precise.

Please contact your plan administrator if you have any questions.


Jane Doe

Jane Doe

Vice President, ABC National Bank

  • Attaches (or included with) the investment information of the plan to be certified.
  • Covers the entire period audited.
  • The institution certifies both the completeness and accuracy of investment information; no caveats or other qualifying language.
  • Signed by an authorized representative of the qualified institution.

If the plan changed custodians during the year, plan management will want to ensure that certificates are obtained from both custodians and that the period covered by the certificates is appropriate. Beware of custodian changes towards the end of the plan year, as this can be tricky. It is even more important to review the dates and amounts included in the certification.

For example: A plan ending on December 31 may have a change of custodian on December 31. However, the old custodian liquidated the assets on December 31 and the new custodian received the assets on January 3. The old custodian can certify $0 in investments as of December 31, however, they still hold the cash. Money is not an investment and cannot be certified. In this case, an ERISA Non-Section 103(a)(3)(C) audit would be required.

As you can see, there are many considerations. Some are simple, while others can be a bit tricky. If you have any questions, please contact one of our benefit plan specialists within EisnerAmper’s Pension Services group.

Access the rest of this blog series below:

Part 1: Census reconciliation

Part 2: Deadline timeline

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