[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5226 Introduced in House (IH)]
103d CONGRESS
2d Session
H. R. 5226
To amend title I of the Employee Retirement Income Security Act of 1974
to improve enforcement of such title by adding certain provisions with
respect to the auditing of employee benefit plans, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 6, 1994
Mrs. Mink introduced the following bill; which was referred to the
Committee on Education and Labor
_______________________________________________________________________
A BILL
To amend title I of the Employee Retirement Income Security Act of 1974
to improve enforcement of such title by adding certain provisions with
respect to the auditing of employee benefit plans, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
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.
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