Full-scope audits require all of the major account balances to be audited, including full testing of investments and related supplemental information. An audit opinion will be issued as to whether the financial statements are presented fairly in accordance with generally accepted accounting principles (GAAP).
Limited-scope audits do not require auditing of investment information prepared and certified to by a qualified institution. All other balances and transactions are subject to the same audit procedures as the full-scope audit. A qualified institution is either a bank or an insurance carrier that is acting as the trustee or custodian of the Plan assets. The institution must also be chartered and be regulated by state or federal agencies. If plan management instructs the auditor to perform a limited scope audit, the auditor’s report will include a disclaimer of opinion on the financial statements that states that because of the significance of the information the auditor did not audit, the auditor has not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, the auditor will not express an opinion on the financial statements. In addition, the auditor’s report includes an other-matter paragraph that disclaims an opinion on the supplemental schedules and a report on the form and content of the supplemental schedules in compliance with DOL rules and regulations.
Investment and broker companies generally are not qualified to certify plan assets, and therefore a full-scope audit would be needed