Teacher Retirement System of Texas. Reporting Entity Audits

Transcription

1 Teacher Retirement System of Texas Reporting Entity Audits Amy Barrett, Dinah Arce, Art Mata November 14, 2014

2 Agenda 1. New Audit Requirements: AICPA whitepaper on census data testing New Audit Requirements State Auditor s Office (SAO) Audit Activities TRS Audit Activities 2. Prior Reviews Conducted by TRS staff: Criteria, Resources, Review Results Eligibility Employment l t After Retirement t (EAR) Compensation and Contributions 2

3 Agenda (continued) 3. Tools Reporting Entity Self-Audits Audit Resources 4. Questions 3

4 New Audit Requirements: AICPA whitepaper on census data testing 4

5 New Audit Requirements About the AICPA whitepaper: Issued in February 2014 Effective immediately Issued in response to GASB 68 requiring recognition of a pension liability by reporting entities Technically considered guidelines versus requirements ; however adopted by SAO Official requirements are coming 5

6 New Audit Requirements About the AICPA whitepaper, continued: Specifies responsibility for completeness and accuracy of census data is also the responsibility of the pension plan, not just reporting entities Census data includes (but is not limited to): Dates of birth, hire, termination, retirement Eligible compensation Years of service Gender Employment status 6

7 New Audit Requirements About the AICPA whitepaper, continued: Provides for audit scrutiny of census data reported to pension plans Plan s financial auditor (SAO) Plan s internal auditor Audits of plan s internal controls at plan Audits of reporting entity information submitted to plan Audits of information submitted to the actuary calculating the pension liability 7

8 SAO Audit Activities SAO audit activities: Reporting entities have been selected for testing on a rotating basis Some small reporting entities are excluded and will never be audited Testing is in progress and will need to be complete by November Exceptions identified by SAO will be reported to TRS for follow-up and correction with reporting entities SAO will also audit the overall pension liability calculation and allocation schedule 8

9 TRS Audit Activities TRS audit activities: Onsite audits at reporting entities Scope: completeness and accuracy of reports submitted to TRS Focus areas Eligibility Compensation Employment After Retirement 1.5% Payment for Non-OASDI Members 9

10 TRS Audit Activities TRS audit activities, continued: TRS internal and actuary audits testing of control within TRS over Information submitted to the actuary for calculating the pension liability Information collected from reporting entities Participation i in TEAM TRS Enterprise Application Modernization program 10

11 Prior Reviews Conducted by TRS staff: Criteria, Resources, Review Results 11

12 Eligibility Criteria and Resources Eligibility in TRS is based on three main criteria: 1. Employment must be on a regular basis 2. Employment must be for one-half or more of the standard full-time workload 3. Salary must be comparable to the rate of pay earned by other employees in the same or similar il position TRS Website, click on Employers, Employment Eligible for TRS Membership; TRS Employer Payroll Manual and other supplemental information 12

13 Eligibility Review Results Eligibility review results include: Ineligible but reported to TRS Employees working for non-covered TRS entity Part-time time staff with insufficient hours for eligibility Substitute teachers Eligible but not reported to TRS Full-time food service workers, custodians, teachers Employees incorrectly categorized as independent contractors or leased employees 13

14 Employment After Retirement (EAR) Criteria and Resources EAR includes consideration of the following: One Calendar Month Break-in-Service Substitute One-Half Time Full-time Third-Party Entities & Independent Contractors Surcharges: Pension and TRS-Care TRS Website, click on Employers, Update Newsletter, July 2014, Vol. 33 No. 4, When surcharges are due for retirees working more than one-half time, Employment After Retirement Brochure 14

15 Employment After Retirement Review Results EAR and Surcharges review results include: Retirees not reported on Employment of Retired Members Report Pension and TRS-Care Surcharges are not reported/deposited on the retirees who retired after September 1, 2005 and exceeded allowable work hours/days 15

16 Compensation Criteria and Resources Compensation is recurring base pay for periods of employment that meet definition of salary and wages: Payment for services rendered Earned or accrue proportionally p as work performed Paid at fixed internals Not specifically excluded under TRS laws and rules TRS Website, click on Employers, Creditable Compensation: Compensation Eligible for TRS; TRS Employer Payroll Manual and other supplemental information 16

17 Compensation Review Results Compensation review results include ineligible salaries: Salary allocation issues - Full salary reported to TRS when salary consisted of school salary and salary for work at a non-trs covered entity; associated recordkeeping issues Bonuses that are not performance pay, signing bonus, unpaid time off, unearned stipends and state supplemental pay included in gross pay reported to TRS Net pay reported instead of gross pay Unsupported pay additional and hourly pay 17

18 Contributions Review Results In addition to contribution errors due to eligibility and compensation issues, contribution errors also include: Federal Funds Required contributions not reported/deposited p on employees whose salaries are paid all or partially with federal funds N New Members Required contributions are not reported/deposited on employees who are new members to TRS Contributions reported on employees new to school but are not new TRS members 18

19 19 Tools

20 Reporting Entity Self-Audits Self-Audits cover the following areas: Employment After Retirement Pension Surcharge TRS-Care Surcharge Each Self-Audit includes: Explanation of responsibilities and requirements List of records and information needed Step by Step Self-Audit Instructions Worksheet 20

21 Audit Resources Audit resources will include the following: Presentations & Guidelines TASBO AICPA Whitepapers FAQs Tools Audit Programs Self-Audits Reports Audit Reports Common Findings State Auditor Activity Communication 21

22 Q & A Questions? Contact: employeraudits@trs.state.tx.usstate tx us 22