October 1, 1996
TO: BOARD OF GOVERNORS No. 54-96
ACCOUNTING/TREASURERS COMMITTEE No. 39-96
FEDERAL LEGISLATION MEMBERS No. 15-96
OPERATIONS COMMITTEE No. 25-96
PENSION COMMITTEE No. 42-96
PUBLIC INFORMATION COMMITTEE No. 38-96
RE: LEGISLATION TO REPEAL ERISA’S "LIMITED SCOPE AUDIT" DEFEATED
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The Employee Retirement Income Security Act (ERISA) currently requires a pension plan
with 100 or more participants to include an independent auditor’s report when it files its annual
report with the Internal Revenue Service, but permits "limited scope audits" which rely on certified
audit statements from financial services institutions that are federally or state regulated. The
Institute views the "limited scope audit" as an important efficiency, avoiding duplicate audits of
financial services institutions.
Earlier this year, Senators Paul Simon (D-IL) and James Jeffords (R-VT), at the request of the
Department of Labor and the Administration, introduced S. 1490, the "Pension Audit Improvement
Act of 1995." S. 1490 would have repealed the "limited scope audit" provision with the result that
the costs borne by plans and employer sponsors would have been unnecessarily and substantially
increased, and federally-regulated financial services institutions, including mutual funds, would
have been subject to extensive and redundant auditing. The Institute was part of a broad coalition
that opposed S. 1490.
I am pleased to report that attempts to repeal the "limited scope audit" were defeated in the
closing days of the Congress.
Matthew P. Fink
President