SECTION 1. SHORT TITLE.

    This Act may be cited as the ``ERISA Audit Improvement Act of 
1994''.

SEC. 2. REPEAL OF LIMITED SCOPE AUDIT.

    (a) In General.--Section 103(a)(3) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1023(a)(3)) is amended by 
striking subparagraph (C) and by redesignating subparagraph (D) as 
subparagraph (C).
    (b) Conforming Amendment.--Section 104(a)(5)(A) of such Act (29 
U.S.C. 1024(a)(5)(D)) is amended by striking ``section 103(a)(3)(D)'' 
and inserting ``section 103(a)(3)(C)''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to opinions required under section 103(a)(3)(A) of 
the Employee Retirement Income Security Act of 1974 for plan years 
beginning on or after January 1 of the calendar year following the date 
of the enactment of this Act.

SEC. 3. EXTERNAL QUALITY CONTROL REVIEW REQUIREMENT FOR QUALIFIED 
              PUBLIC ACCOUNTANTS.

    (a) In General.--Section 103(a)(3)(C) of the Employee Retirement 
Income Security Act of 1974 (as redesignated by section 2) is amended--
            (1) by striking ``means'' and inserting ``means, with 
        respect to any engagement of an accountant under subparagraph 
        (A)'';
            (2) by redesignating clauses (i), (ii), and (iii) as 
        subclauses (I), (II), and (III), respectively;
            (3) by inserting ``(i)'' after ``(C)'';
            (4) in subclause (III) (as redesignated), by striking the 
        period and inserting a comma;
            (5) by adding after and below such subclause (III) the 
        following:
``if such person meets the requirements of clause (ii) with respect to 
such engagement.''; and
            (6) by adding at the end the following new clauses:
    ``(ii) A person meets the requirements of this clause with respect 
to an engagement of such person as an accountant under subparagraph (A) 
if such person--
            ``(I) has in operation an appropriate internal quality 
        control system, and
            ``(II) has undergone a qualified external quality control 
        review of the person's accounting and auditing practices, 
        including such practices relevant to employee benefit plans (if 
        any), during the 3-year period immediately preceding such 
        engagement.
    ``(iii) For purposes of clause (ii)(II), an external quality 
control review shall be treated as `qualified' with respect to a person 
referred to in clause (ii) if--
            ``(I) such review is performed in accordance with the 
        requirements of external quality control review programs of 
        recognized auditing standard-setting bodies, as determined by 
        the Comptroller General of the United States or in regulations 
        of the Secretary, and
            ``(II) in the case of any such person who has conducted one 
        or more previous audits of employee benefit plans, such review 
        includes the review of an appropriate number (determined as 
        shall be provided in such regulations but in no case less than 
        one) of plan audits in relation to the scale of such person's 
        auditing practice.''.
    (b) Effective Date.--The amendments made by this section shall 
apply with respect to plan years beginning on or after the date which 
is 3 years after the date of the enactment of this Act.

SEC. 4. REQUIREMENT FOR REPORTING OF CERTAIN EVENTS.

    (a) In General.--Part 1 of subtitle B of title I of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1021 et seq.) is 
amended--
            (1) by redesignating section 111 as section 112; and
            (2) by inserting after section 110 the following new 
        section:

                  ``direct reporting of certain events

    ``Sec. 111. (a) Required Notifications.--
            ``(1) Notifications by plan administrator.--In the case of 
        an administrator of an employee benefit plan, within 5 business 
        days after the administrator first has reason to believe (or 
        after the administrator is notified under paragraph (2)) that 
        an irregularity may have occurred with respect to the plan, the 
        administrator shall--
                    ``(A) notify the Secretary of the irregularity in 
                writing; and
                    ``(B) furnish a copy of such notification to the 
                accountant who is currently engaged under section 
                103(a)(3)(A).
            ``(2) Notifications by accountant.--
                    ``(A) In general.--In the case of an accountant 
                engaged by the administrator of an employee benefit 
                plan under section 103(a)(3)(A), within 5 business days 
                after the accountant first has reason to believe in 
                connection with such engagement that an irregularity 
                may have occurred with respect to the plan, the 
                accountant shall--
                            ``(i) notify the plan administrator of the 
                        irregularity in writing, or
                            ``(ii) if the accountant has reason to 
                        believe that the irregularity may have involved 
                        an individual who is the plan administrator or 
                        who is a senior official of the plan 
                        administrator, notify the Secretary of the 
                        irregularity in writing.
                    ``(B) Notification upon failure of plan 
                administator to notify.--In any case in which an 
                accountant who has provided notification to the plan 
                administrator pursuant to subparagraph (A)(i) with 
                respect to any irregularity has not received a copy of 
                the administrator's notification to the Secretary with 
                respect to such irregularity within the 5-business-day 
                period specified under paragraph (1)(B), the accountant 
                shall furnish to the Secretary a copy of the 
                accountant's notification made to the plan 
                administrator within the next business day following 
                such 5-business-day period.
            ``(3) Irregularity defined.--For purposes of this 
        subsection, the term `irregularity' means an indication of--
                    ``(A) theft, embezzlement, or a violation of 
                section 664 of title 18, United States Code (relating 
                to theft or embezzlement from employee benefit plan),
                    ``(B) extortion or a violation of section 1951 of 
                such title 18 (relating to interference with commerce 
                by threats or violence),
                    ``(C) bribery, a kickback, or a violation of 
                section 1954 of such title 18 (relating to offer, 
                acceptance, or solicitation to influence operations of 
                employee benefit plan),
                    ``(D) a violation of section 411, 501, or 511 of 
                this title (relating to criminal violations), or
                    ``(E) any intentional misstatement or omission of 
                an amount or disclosure in a financial statement, 
                accounting record, or supporting document undertaken to 
                mislead,
        except that such term shall not include any act or omission 
        described in this paragraph involving less than $1,000 unless 
        there is reason to believe that the act or omission may bear on 
        the integrity of plan management.
    ``(b) Notification Upon Termination of Engagement of Accountant.--
            ``(1) Notification by plan administrator.--Within 5 
        business days after the termination of an engagement for 
        auditing services under section 103(a)(3)(A) with respect to an 
        employee benefit plan, the administrator of such plan shall--
                    ``(A) notify the Secretary in writing of such 
                termination, giving the reasons for such termination, 
                and
                    ``(B) furnish the accountant whose engagement was 
                terminated with a copy of the notification sent to the 
                Secretary.
            ``(2) Notification by accountant.--If the accountant 
        referred to in paragraph (1)(B) has not received a copy of the 
        administrator's notification to the Secretary as required under 
        paragraph (1)(B), or if the accountant disagrees with the 
        reasons given in the notification of termination of the 
        engagement for auditing services, the accountant shall notify 
        the Secretary in writing of the termination, giving the reasons 
        for the termination, within 10 business days after the 
        termination of the engagement.
    ``(c) Determination of Periods Required for Notification.--In 
determining whether a notification required under this section with 
respect to any act or omission has been made within the required number 
of business days--
            ``(1) the day on which such act or omission begins shall 
        not be included; and
            ``(2) Saturdays, Sundays, and legal holidays shall not be 
        included.
For purposes of this subsection, the term `legal holidays' means the 
Federal legal holidays of New Year's Day, Birthday of Martin Luther 
King, Washington's Birthday, Memorial Day, Independence Day, Labor Day, 
Columbus Day, Veterans Day, Thanksgiving Day, Christmas Day, and any 
other day appointed as a holiday by the President or the Congress of 
the United States, or by the State in which the person responsible for 
making the notification principally conducts his business.
    ``(d) Immunity for Good Faith Notification.--Except as provided in 
this Act, no accountant shall be liable to any person for any finding, 
conclusion, or statement made in any notification made pursuant to 
subsections (a)(2) or (b)(2), or pursuant to any regulations issued 
thereunder, if such finding, conclusion, or statement is made in good 
faith.''.
    (b) Civil Penalty.--
            (1) In general.--Section 502(c) of such Act (29 U.S.C. 
        1132(c)) is amended by adding at the end the following new 
        paragraph:
    ``(5) The Secretary may assess a civil penalty of up to $100,000 
against any administrator and against any accountant who fails to 
provide the Secretary with any notification as required under section 
111.''.
            (2) Conforming amendment.--Section 502(a)(6) of such Act 
        (29 U.S.C. 1132(a)(6)) is amended by striking ``subsection 
        (c)(2) or (i) or (l)'' and inserting ``paragraph (2), (3), (4), 
        or (5) of subsection (c) or subsection (i) or (l)''.
    (c) Clerical Amendments.--
            (1) Section 514(d) of such Act (29 U.S.C. 1144(d)) is 
        amended by striking ``111'' and inserting ``112''.
            (2) The table of contents in section 1 of such Act is 
        amended by striking the item relating to section 111 and 
        inserting the following new items:

``Sec. 111. Direct reporting of certain events.
``Sec. 112. Repeal and effective date.''.
    (d) Effective Date.--The amendments made by this section shall 
apply with respect to any irregularity described in such amendments 
only if the 5-day-period described in such amendments in connection 
with such irregularity commences on or after the date of the enactment 
of this Act.
ERISA Audit Improvement Act of 1994 - Amends the Employee Retirement Income Security Act of 1974 (ERISA) to revise provisions relating to auditing of employee benefit plans. 
Eliminates provisions which allow certain limited scope audits by banks, similar institutions, or insurance carriers to fulfill the requirement for an audit by an independent public accountant as part of an employee benefit plan's annual report. 
Requires external quality control review of qualified public accountants for such ERISA audits. 
Requires notifications of certain events by plan administrators and accountants.  Authorizes assessment of a civil penalty against any plan administrator or accountant who fails to provide the Secretary of Labor with any such required notification.
ERISA Audit Improvement Act of 1994