What it is
When an employee stock ownership plan owns the company, the company’s own statements carry the ESOP loan, unearned ESOP shares, compensation expense for shares released and a repurchase obligation that can be large. The value of the stock sits with an outside appraiser, and the auditor has to evaluate that work.
This program covers the sponsor company’s financial statements. The audit of the plan itself under ERISA is a separate engagement. The workbook has procedures, a risk tab, completion tracking and tie-outs to the trial balance.
When to use it
- At planning for the audit of a company with an ESOP, to scope valuation and repurchase testing.
- When the appraiser’s report arrives and needs evaluation under AU-C 620.
- At year end to recompute compensation expense and the repurchase obligation.
What’s inside
- ESOP loan, internal loan and shares released procedures
- Compensation expense recomputation and unearned ESOP shares
- Appraiser competence, assumptions and data testing
- Repurchase obligation, put options and redeemable share classification
- S corporation and related party procedures
Standard cited
This template follows ASC 718-40 / ASC 480. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use.
Questions
Is this the same as an ESOP plan audit?
No. This covers the sponsor company’s statements. The plan’s audit covers plan assets, participant data and the Form 5500, and uses the benefit plan templates.
Does the auditor accept the appraisal as given?
The appraiser is management’s specialist. The auditor evaluates competence, objectivity, the work and its data, and may use an auditor’s specialist for the assumptions.
How is compensation expense measured?
For shares committed to be released, at fair value in the period. The program has the auditor recompute it and agree the credit to unearned ESOP shares.
Related templates
- ESOP Leveraged Loan and Shares Released Schedule
- ESOP Valuation Specialist Evaluation Memo
- Audit Program: Debt and Equity
- 401(k) and ERISA Defined Contribution Plan Audit Checklist
Last updated 11/05/2026. All free templates.