financial statement reporting

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McGladrey & Pullen, LLP is a member firm of RSM International – an affiliation of separate and independent legal entities.

Financial Statement Reporting & DisclosureSession 32

Standard Auditors Report

• Scope of work and responsibilities• How the audit was conducted• Opinion

2

Standard Auditors Report

• Defined Contribution• Defined Benefit

– End of year method– Beginning of year method

• Health & Welfare

Limited Scope Report

• What we were engaged to audit• What we did not audit• Disclaimer of opinion

3

Report on Supplemental Schedules

• Defines what schedules• Modified reports

Qualified or adverse as to schedules

Explanatory paragraph


Required schedule inconsistent with FS




Required schedule omitted




Required info omitted from schedule

Limited ScopeException in Non-Certified Info

Limited ScopeException in Certified Info

Full Scope AuditError, Omission, or Inconsistency

4

Financial Statements – All Plans

• Statement of Net Assets Available for Benefits– Always comparative

• Statement(s) of Changes in Net Assets Available for Benefits– Usually single year, except in a Defined Benefit

plan using beginning of year method

Financial Statements – DB Plans

• Statement(s) of Accumulated Plan Benefits– Usually comparative, except in a plan using

beginning of year method• Statement of Changes in Accumulated Plan

Benefits– Always single year

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Financial Statements – H&W Plans

• Statements of Plan Benefit Obligations– Always comparative

• Statement of Changes in Plan Benefit Obligations– Always single year

Supplemental Schedules

• Schedule of Assets Held (At End of Year)• Schedule of Reportable Transactions

6

Footnotes – All Plans• Description of plan

– General– Contributions– Participant Accounts– Vesting– Participant Loans– Payment of Benefits– Forfeited Accounts

Footnotes – All Plans

• Significant accounting policies– Use of estimates– Investment valuation and income recognition– Payment of benefits

• Plan Termination• Investments

– Participant Directed– Non-participant Directed

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• Investments– Assets representing 5% or more of net assets– Appreciation (depreciation) of investments– Non-participant directed– Contracts with insurance companies


• Plan amendments• Tax status• Reconciliation to Form 5500• Related party transactions• Risks and uncertainties

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Footnotes – DB Plans

• Pension and death and disability benefits• Actuarial present value of accumulated plan

benefits• Funding policy

Definition of Accumulated Plan BenefitsThose future periodic payments, including lump-sum distributions, that are attributable under the Plan’s provisions to the service employees have rendered. They include benefits expected to be paid to:

•Retired or terminated employees or their beneficiaries•Beneficiaries of employees who have died•Present employees or their beneficiaries

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Definition of Actuarial Present Value of Accumulated Plan Benefits (APB)

The amount that results from applying actuarial assumptions to adjust APB to reflect the time value of money (through discounts for interest) and the probability of payment (by means of decrements such as for death, disability, withdrawal, or retirement) between the valuation date and the expected date of payment.

Footnotes – H&W Plans

• Benefit obligations• Funding and operation of the plan

– Funding– Administration– Benefits under the plan– Obligations under the plan

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Common Reporting Errors

• Improper Use of Limited Scope Opinion• Reporting of Late Contributions

Exhibit A FULL SCOPE DEFINED CONTRIBUTION PLAN

INDEPENDENT AUDITOR'S REPORT

To the Trustee(s) Model Corporation Employees' Profit-Sharing Plan Clientown, State We have audited the accompanying statements of net assets available for benefits of Model Corporation Employees' Profit-Sharing Plan as of December 31, 2004 and 2003, and the related statement of changes in net assets available for benefits for the year ended December 31, 2004. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of Model Corporation Employees' Profit-Sharing Plan as of December 31, 2004 and 2003, and the changes in net assets available for benefits for the year ended December 31, 2004, in conformity with accounting principles generally accepted in the United States of America. Officetown, State February 20, 2005

Exhibit B

FULL SCOPE DEFINED BENEFIT PLAN

INDEPENDENT AUDITOR'S REPORT To the Trustee(s) XYZ Pension Plan Clientown, State We have audited the accompanying statements of net assets available for benefits and accumulated plan benefits of XYZ Pension Plan as of December 31, 2004 and 2003, and the related statements of changes in net assets available for benefits and changes in accumulated plan benefits for the year ended December 31, 20041. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial status of XYZ Pension Plan as of December 31, 2004 and 2003, and the changes in its financial status for the year ended December 31, 2004, in conformity with accounting principles generally accepted in the United States of America. Officetown, State February 20, 2005 Beginning of year: We have audited the accompanying statements of net assets available for benefits of XYZ Pension Plan as of December 31, 2004 and 2003, and the related statements of changes in net assets available for benefits for the years then ended and the statement of accumulated plan benefits and changes in accumulated plan benefits as of and for the year ended December 31, 2003. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. In our opinion, the financial statements referred to above present fairly, in all material respects, information regarding the Plan's net assets available for benefits as of December 31, 2004 and 2003 and changes therein for the years then ended and its financial status as of December 31, 2003, and changes therein for the year then ended in conformity with accounting principles generally accepted in the United States of America. Officetown, State February 20, 2005

1 Assumes an end of year method. See differences in paragraph below. For example of full report for beginning of year method, see audit guide page 175

Exhibit C FULL SCOPE HEALTH & WELFARE PLAN


To the Trustee(s) XYZ Benefit Plan Clientown, State We have audited the accompanying statements of net assets available for benefits and of plan benefit obligations of XYZ Welfare Benefit Plan as of December 31, 2004 and 2003, and the related statements of changes in net assets available for benefits and of changes in benefit obligations for the year then ended December 31, 2004. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial status of XYZ Welfare Benefit Plan as of December 31, 2004 and 2003, and the changes in its financial status for the year ended December 31, 2004, in conformity with accounting principles generally accepted in the United States of America. Officetown, State February 20, 2005

Exhibit D LIMITED SCOPE ANY PLAN


To the Trustee(s) XYZ Pension Plan Clientown, State We were engaged to audit the financial statements and supplemental schedules of XYZ Pension Plan as of December 31, 2004 and 2003, and for the year ended December 31, 2004, as listed in the accompanying [index] [table of contents]. These financial statements and supplemental schedules are the responsibility of the Plan's management. As permitted by 29 CFR 2520.103-8 of the United States Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, the Plan Administrator instructed us not to perform, and we did not perform, any auditing procedures with respect to the [cash, investments, investment transactions and related income, which were] [information summarized in Note X, which was] certified by ABC Bank, the [trustee] [custodian] of the Plan, except for comparing the information with the related information included in the financial statements and supplemental schedules. We have been informed by the Plan Administrator that the [trustee] [custodian] holds the Plan's investment assets and executes investment transactions. The Plan Administrator has obtained certifications from the [trustee] [custodian] as of and for the year ended December 31, 2004, and December 31, 2003, that the information provided to the Plan Administrator by the [trustee] [custodian] is complete and accurate.1 Because of the significance of the information that we did not audit, we are unable to, and do not, express an opinion on the accompanying financial statements and schedules taken as a whole. The form and content of the information included in the financial statements and supplemental schedules, other than that derived from the information certified by the [trustee] [custodian], have been audited by us in accordance with auditing standards generally accepted in the United States of America and, in our opinion, are presented in compliance with the United States Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. Officetown, State February 20, 2005

1 The language used by the certifying party should be quoted in our opinion. A common example of this is " ... complete and

accurate to the best of our knowledge."

Exhibit E FULL SCOPE SUPPLEMENTAL SCHEDULES


To the Trustee(s) XYZ Pension Plan Clientown, State Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of [IDENTIFY SCHEDULES] as of or for the year ended December 31, 2004, are presented for the purpose of additional analysis and are not a required part of the basic financial statements, but are supplementary information required by the United States Department of Labor Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. Officetown, State February 20, 2005

Exhibit F EXPLANATORY PARAGRAPH


To the Trustee(s) XYZ Pension Plan Clientown, State [Same first, second and third paragraphs as in our standard or limited scope report.] [If the full GAAP audit, include the standard supplemental schedule paragraph as described in 0502.01.] [The schedule of assets held for investment purposes that accompanies the Plan's financial statements does not disclose the historical cost of certain nonparticipant directed plan assets held by the Plan trustee. Disclosure of this information is required by the United States Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974.]

or

[The Plan has not presented the schedule of reportable transactions (transactions in excess of five percent of the current value of plan assets at the beginning of the year) for nonparticipant directed plan assets. Disclosure of this information is required by the United States Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974.]

or [The schedule of prohibited transactions that accompanies the Plan's financial statements does not disclose that the Plan [DESCRIBE PROHIBITED TRANSACTION]. Disclosure of this information, which is not considered material to the financial statements taken as a whole, is required by the United States Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974.] Officetown, State February 20, 2005

Exhibit G

QUALIFIED OR ADVERSE OPINION ON SUPPLEMENTAL SCHEDULES - FULL SCOPE


To the Trustee(s) XYZ Pension Plan Clientown, State [Same first, second, and third paragraphs as in our standard report.] The schedule of assets held for investment purposes that accompanies the Plan's financial statements does not disclose that the Plan had loans to participants which are considered assets held for investment purposes. Disclosure of this information is required by the United States Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974.

or The schedule of prohibited transactions that accompanies the Plan's financial statements does not disclose that the Plan [DESCRIBE PROHIBITED TRANSACTION]. Disclosure of this information is required by the United States Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The supplemental schedules of [IDENTIFY SCHEDULES] as of or for the year ended December 31, 2004, are presented for the purpose of additional analysis and are not a required part of the basic financial statements, but are supplementary information required by the United States Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, except for the omission of the information discussed in the preceding paragraph, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.

or Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The supplemental schedules of [IDENTIFY SCHEDULES] as of or for the year ended December 31, 2004, are presented for the purpose of additional analysis and are not a required part of the basic financial statements, but are supplementary information required by the United States Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, because of the omission of the information discussed in the preceding paragraph, are not fairly stated in all material respects in relation to the basic financial statements taken as a whole. Officetown, State February 20, 2005 NOTE: This is not considered a qualified or adverse opinion on the financial statements for purposes of answering question 3a in Part III of the Form 5500, Schedule H.

Exhibit H

QUALIFIED OR ADVERSE OPINION ON SUPPLEMENTARY SCHEDULES - LIMITED SCOPE


To the Trustees XYZ Pension Plan Clientown, State [Same first and second paragraphs as in our standard limited scope report.] The schedule of assets held for investment purposes that accompanies the Plan's financial statements does not disclose that the Plan had loans to participants which are considered assets held for investment purposes. Disclosure of this information is required by the United States Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974.

or The schedule of prohibited transactions that accompanies the Plan's financial statements does not disclose that the Plan [DESCRIBE PROHIBITED TRANSACTION]. Disclosure of this information is required by the United States Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974.1

or The Plan has not presented the schedule of prohibited transactions. Disclosure of this information is required by the United States Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. Because of the significance of the information that we did not audit, we are unable to, and do not, express an opinion on the accompanying financial statements and supplemental schedules taken as a whole. The form and content of the information included in the financial statements and supplemental schedules, other than that derived from the information certified by the [trustee] [custodian], have been audited by us in accordance with generally accepted auditing standards and, in our opinion, except for the omission of the information discussed in the preceding paragraph, are presented in compliance with the United States Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974.

or Because of the significance of the information that we did not audit, we are unable to, and do not, express an opinion on the accompanying financial statements and supplemental schedules taken as a whole. The form and content of the information included in the financial statements and supplemental schedules, other than that derived from the information certified by the [trustee] [custodian], have been audited by us in accordance with generally accepted auditing standards and, in our opinion, because of the omission of the information discussed in the preceding paragraph, are not presented in compliance with the United States Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. NOTE: This is not considered a qualified or adverse opinion on the financial statements for purposes of answering question 3a in Part III of the Form 5500, Schedule H.

Exhibit I ABC COMPANY 401(K) SAVINGS PLAN

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS December 31, 2004 and 2003 Assets 2004 2003 Investments (See Note C) $

9,177,000

$ 7,995,000

Receivables

Employer's contribution 14,000 10,000Participants' contribution 52,000 50,000

66,000 60,000

Total assets Liabilities:

9,243,000 8,055,000

Excess contributions refundable 10,000 20,000Accrued expenses 15,000 -

Total liabilities

25,000 20,000

Net assets available for benefits $ 9,218,000 $ 8,035,000

See accompanying notes to the financial statements

Exhibit J ABC COMPANY 401(K) SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS Year Ended December 31, 2004 Additions to net assets attributed to:

Investment income: Net appreciation in fair value of investments $ 279,000Interest and dividends 604,000 Less investment expenses

883,000(50,000)833,000

Contributions: Participants' 900,000Employer's 699,000 1,599,000

Total additions

2,432,000

Deductions from net assets attributed to:

Benefits paid to participants 1,144,000Administrative expenses 105,000

Total deductions

1,249,000

Net increase

1,183,000

Net assets available for benefits:

Beginning of year 8,035,000 End of year

9,218,000


Exhibit K

XYZ COMPANY PENSION PLAN

STATEMENT OF ACCUMULATED PLAN BENEFITS December 31, 2004 and 2003 2004 2003 Actuarial present value of accumulated plan benefits

Vested benefits: Participants currently receiving benefits $ 3,040,000 $ 2,950,000Other participants 8,120,000 6,530,000 11,160,000 9,480,000

Nonvested benefits 2,720,000 2,400,000

Total actuarial present value of accumulated plan benefits $ 13,880,000 $ 11,880,000


Exhibit L

XYZ COMPANY PENSION PLAN

STATEMENT OF CHANGES IN ACCUMULATED PLAN BENEFITS December 31, 2004 2004

Actuarial present value of accumulated plan benefits at beginning of year $ 11,880,000Increase (decrease) during the year attributable to:

Benefits accumulated 895,000Benefits paid (997,000)Increase for interest due to the decrease in the discount period 742,500Plan amendment 2,410,000Changes in actuarial assumptions (Note B) (1,050,500)

Net increase 2,000,000

Actuarial present value of accumulated plan benefits at end of year $ 13,880,000


Exhibit M

ABC COMPANY, INC. COMPREHENSIVE

MAJOR MEDICAL HEALTH CARE PLAN

STATEMENT OF PLAN'S BENEFIT OBLIGATIONS December 31, 2004 and 2003 2004 2003 Amounts currently payable:

Claims payable, including claims incurred but not yet reported $ 1,000,000 $ 1,000,000Premiums due to insurers 200,000 50,000 1,200,000 1,050,000

Postemployment benefit obligations, net of amounts currently payable

Death and disability benefits for inactive participants 1,350,000 1,000,000

Postretirement benefit obligations, net of amounts currently payable Retired participants 2,000,000 1,900,000Other participants fully eligible for benefits 4,000,000 3,600,000Participants not yet fully eligible for benefits 5,000,000 4.165,000 11,000,000 9,665,000

Plan's benefit obligations $ 13,550,000 $ 11,715,000 See accompanying notes to the financial statements

Exhibit N

ABC COMPANY, INC. COMPREHENSIVE MAJOR MEDICAL HEALTH CARE PLAN

STATEMENT OF CHANGES IN PLAN'S BENEFIT OBLIGATIONS Year Ended December 31, 2004 2004 Amounts currently payable:

Balance at beginning of year $ 1,050,000Claims reported and approved for payment, including benefits reclassified from benefit obligations 16,920,000Claims paid (16,770,000)

Balance at end of year 1,200,000 Postemployment benefit obligations, net of amounts currently payable:

Balance at beginning of year 1,000,000Increase (decrease) in postemployment benefits attributable to:

Benefits earned 600,000Benefits reclassified to amounts currently payable (450,000)Interest 90,000Changes in actuarial assumptions and other actuarial gains and losses

110,000Balance at end of year 1,350,000

Postretirement benefit obligations, net of amounts currently payable: Balance at beginning of year 1,000,000

Increase (decrease) in postretirement benefits attributable to: Benefits earned 1,150,000Benefits reclassified to amounts currently payable (650,000)Interest 750,000Plan amendment (175,000)Changes in actuarial assumptions and other actuarial gains and losses

260,000Balance at end of year 11,000,000

Plan's benefit obligations at end of year $ 13,550,000 See accompanying notes to the financial statements

Exhibit O

BETA COMPANY 401(K) EMPLOYEE SAVINGS PLAN

Schedule H, Line 4i - Assets Held (At End of Year)

December 31, 2004

Identify of Issuer,

Borrower, Lessor, or

Similar Party

Description of Investment, Including Maturity Date, Rate of Interest, Collateral, Par, or

Maturity Value

Cost1

Current Value

* DEF Bank DEF Bank GIC Fund (15,096,829 units) $ XXX,XXX $ XXX,XXX * ABC Bank ABC Bank Income Fund (152,345 units) $ XXX,XXX $ XXX,XXX* ABC Bank ABC Bank Growth Fund (314,881 units) $ XXX,XXX $ XXX,XXX* ABC Bank ABC Bank Balanced Fund (604,941 units) $ XXX,XXX $ XXX,XXX* ABC Bank ABC Bank International Equity Fund (55,061 units) $ XXX,XXX $ XXX,XXX* ABC Bank ABC Bank Small Companies Fund (36,713 units) $ XXX,XXX $ XXX,XXXParticipants Loans (interest rates of 9-14%, maturity of 5-15

years)

$

XX,XXX

$ XX,XXX Total $ X, XXX,XXX $ X, XXX,XXX

* Represents a party in interest. The above information has been certified by ABC Bank, the Trustee, as complete and accurate. 1 Cost information may be omitted when reporting participant directed investments. (This includes investments

from negative elections.)

Exhibit P

BETA COMPANY 401(K) EMPLOYEE SAVINGS PLAN

Schedule H, Line 4j - Schedule of Reportable Transactions1

For the Year Ended December 31, 2004

Identity of Party Involved

Description

of Asset (include

in interest rate and

maturity in case

of a loan)

Purchase Price

Selling Price

Lease Rental

2

Expense Incurred With Transaction2

Cost of Asset

Current Value of Asset on

Transaction Date

Net Gain (or

loss)

* DEF Bank

GIC Fund $ 3,300,000 $ 5,200,000 $ ___ $ _______ $ 8,500,000 $ 8,500,000 $0

* ABC Bank

Balanced Fund 875,000 775,000 $ ___ $ _______ 1,650,000 1,650,000 150,000

* ABC Bank

Growth Fund 425,000 420,000 $ ____ $ _______ 835,000 845,000 10,000

* Represents a party in interest.

The above information has been certified by ABC Bank, the Trustee, as complete and accurate.

1 This schedule is required for transactions with nonparticipant directed funds only.

2 These columns may be omitted if no amounts are associated with them.

Exhibit Q

Financial Statement Footnotes Investments – Appreciation (Depreciation)

Investments – Nonparticipant directed

Mutual funds $129,000Pooled separate accounts 100,000 Common stock 30,000 Corporate bonds 30,000 U.S. Government Securities (10,000)

279,000$

During the year ended 2004, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated (depreciated) by $279,000 as follows:

2004 2003Net Assets:Common stock 960,000$ 870,000$ Mutual funds 2,262,500 2,000,000 Corporate bonds 307,500 255,000 U.S. Government securities 225,000 120,000

3,755,000$ 3,245,000$

December 31,

Information about the net assets and the significant components of the changes in net assets relating to the nonparticipant-directed investments is as follows:

Exhibit Q (continued)

Reconciliation of Financial Statements to Form 5500

The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500 as of December 31, 2004 and 2003:

2004 2003Net assets available for benefits per the financial statements 9,818,000$ 11,227,000$ Participant contributions receivable (40,000) (50,000) Employer contribution receivable (220,000) (250,000)

Net assets available for benefits per the Form 5500 9,558,000$ 10,927,000$

The following is a reconciliation of changes in net assets available for benefits per the financial statements to the Form 5500 for the year ended December 31, 2004:

Contributions per the financial statements 876,000$ Add prior year:

Participant contributions receivable 50,000 Employer contribution receivable 250,000

Subtract current year:Participant contributions receivable (40,000) Employer contribution receivable (220,000)

Contributions per the Form 5500 916,000$

Investment income (loss) per the financial statements (1,614,750) Unknown classification variance (500)

Investment income (loss) per the Form 5500 (1,615,250)$

Benefit payments per the financial statements 541,600$ Unknown classification variance (500)

Benefit payments per the Form 5500 541,100$

Exhibit R Late Contributions: Per the instructions for the Schedule H, line 4a, found at http://www.irs.gov/instructions/i5500/ch02.html#d0e5831: Delinquent participant contributions reported on line 4a should be treated as part of the separate schedules referenced in ERISA section 103(a)(3)(A) and 29 CFR 2520.103-1(b) and 2520.103-2(b) for purposes of preparing the accountant's opinion described on line 3 even though they are no longer required to be listed on Part III of the Schedule G. If the information contained on line 4a is not presented in accordance with regulatory requirements, the IQPA report must make the appropriate disclosures in accordance with generally accepted auditing standards. For more information, see EBSA's Frequently Asked Questions About Reporting Delinquent Contributions, available on the Internet as www.dol.gov/ebsa. Although all delinquent participant contributions must be reported on line 4a, delinquent contributions for which the DOL Voluntary Fiduciary Correction Program (VFCP) requirements and the conditions of Prohibited Transaction Exemption (PTE) 2002-51 have been satisfied do not need to be treated as nonexempt party-in-interest transactions. From the DOL’s website found at http://www.dol.gov/ebsa/faqs/faq_compliance_5500.html :

Has the Department developed a model for the Line 4a Schedule of Delinquent Participant Contributions that plan administrators and IQPAs can use?

Yes. The schedule could use the format set forth below or a similar format on the same size paper as the Form 5500.

2003 Form 5500 Line 4a - Schedule of Delinquent Participant Contributions

Participant Contributions Transferred Late to Plan

Total that Constitute Nonexempt Prohibited Transactions

Although not required, plan administrators may want to include information regarding the extent to which the delinquencies have been corrected under the VFCP for which the conditions of PTE 2002-51 have been satisfied, delinquencies otherwise corrected, and uncorrected delinquencies. In those cases, the schedule could use the format set forth below:

2003 Form 5500 Line 4a - Schedule of Delinquent Participant Contributions

Total that Constitute Nonexempt Prohibited Transactions Participant Contributions Transferred Late to Plan

Contributions Not Corrected

Contributions Corrected Outside VFCP

Contributions Pending Correction in VFCP

Total Fully Corrected Under VFCP and PTE 2002-51

financial statement reporting

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