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Thread: Employer Audits

  1. #1
    P2F2 Member
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    Employer Audits

    CTPF has the following inquiry:

    We are looking to implement Payroll Audits for Census data from our largest employer pursuant to determining the appropriate amounts for total pension liability, contribution revenue and contribution receivables. Legislation precludes CTPF from directly performing such audits or hiring a firm to do so for this employer. However we were interested in finding out if any organizations in the P2F2 network have entered into an agreement with their employers to get the results of agreed upon procedures that would accomplish the same purpose. Please share with us anything that you can about such engagements.

    Thanks

    Alise

    Alise White CPA
    Chief Financial Officer
    Chicago Teachers' Pension Fund
    203 N. Lasalle, Suite 2600
    Chicago, IL 60601
    T 312-604-1208
    F 312-332-3346
    WhiteA@ctpf.org

  2. #2
    P2F2 Member
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    Alise,

    We do this as our only procedure to validate employer payroll data for all of our cost-sharing and our single employer plans. We don’t have any legislative authority to audit our employers and we don’t have the funding to pay for the audit either.

    We require the employer to pay for their attestation report. We have found that the cost is relatively small (on an incremental basis) for the employers. If the NPL and pension expense is significant to their financials, they typically have very detailed payroll audit testing. So, the cost is mainly to cover issuing a separate report and not so much related to extra audit testing and hours. Additionally, it is all for the prior year due to the timing of the measurement date and reporting date. Once our employers are aware that they are part of the annual request process, they work it into the normal audit procedures to match their annual audit timing.

    We worked with our auditors (CLA at the time) to develop a sample work program, sample management rep letter and sample attestation report. Then I send out the request and copy my auditor and attach the sample documents and provide the due date.

    If you are interested, I can provide a copy of the sample documents for you to look at. It is all pretty straight forward and mainly from the AICPA audit guide.

    Thanks,

    Ahni Smith
    Accounting Director
    720-479-2354
    asmith@FPPAco.org

  3. #3
    P2F2 Member
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    Hello Alise,

    Happy holidays!!

    Staff of the State of Florida Auditor General audit the financial reporting for the Florida Retirement System (FRS) Pension Plan and a separate direct payment subsidy program available to most FRS retirees. Part of their audit is the census data audit for contribution revenue and receivables and the percentage of net pension liability that is allocated based on the contributions paid by the employer to total employer contributions.

    Statutorily we have the authority to audit our participating employers. The Florida Auditor General also has broad audit authority for public employers and routinely audits the largest of our participating employers. Our system auditors have expanded their audit requirements to cover the census data required for the financial reporting.
    • The system auditors audit all FRS employers a minimum of once every three years and we routinely audit small employers that may not meet the audit threshold for the Florida Auditor General.
    • The portion of audits performed by our system auditors covering the census data for financial reporting are shared with the Florida Auditor General to fulfill the system census audit requirements.
    • With this combined approach we are meeting the census data audit requirements within the existing allocated budget and staff of both entities

    The financial liability reporting to the FRS participating employers was intentionally developed with the financial audit and all its requirements being performed by the Florida Auditor General to maximize efficiency and minimize cost. Each employer files separate financial statements that are independently audited and those outside auditors, while relying on the Florida Auditor General’s certification, also perform their own census data and other validations for reasonableness.

    Let me know if you have any questions.

    Sincerely,

    Garry


    Garry Green | Chief of Research and Education
    Division of Retirement for the Florida Retirement System
    850-414-6349 (office)
    Florida Department of Management Services

  4. #4
    P2F2 Member
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    We have not. We use internal staff. Historically, we have also outsourced this work. Our external auditors also perform procedures related to employer payroll and member census data.

    Robin Madsen, CalSTRS

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