13th ANNUAL RUTGERS

GOVERNMENTAL ACCOUNTING &

AUDITING

George Henein, CIA,CISA CFE,CFSA,CGAP

Monday, 18 December, 2006

Pension Fund Audit

Key Operational Risks

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Operational Risks of Pension Operational Risks of Pension FundsFunds

I.I. Legislation/Legal Actions/Court Legislation/Legal Actions/Court DecisionsDecisions

II.II. AdministrationAdministrationA.A. Board of TrusteesBoard of TrusteesB.B. Audit CommitteeAudit CommitteeC.C. ExecutiveExecutiveD.D. Strategic PlanningStrategic Planning

III.III. StaffingStaffingA.A. Attracting, Training, Maintaining, Promoting, Attracting, Training, Maintaining, Promoting,

and Retaining Employeesand Retaining EmployeesB.B. Managing EmployeesManaging EmployeesC.C. Segregating DutiesSegregating Duties

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Operational Risks Cont’d IV. Enrollment of Members

A. Employment and Enrollment of New Members

B. Communication with New Members

C. Benefit Formula

D. Name; Address; Birth Date; Gender; Marital Status; Social Security Number; Beneficiaries

V. Collection & Maintenance of Member DataA. Payroll Data

B. Changes to Member/Retiree Data

C. Maintenance of Member/Retiree Data

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Operational Risks Cont’d

VI. Communications with MembersA. Member StatementsB. Retirement EstimatesC. Retirement Planning ServicesD. Customer ServiceE. PublicationsF. Internet Access to InformationG. Customer Call CenterH. Field PresentationsI. Unclaimed Member Accounts and

Unclaimed Benefits

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Operational Risks Cont’d

VII. All Benefits

VIII.Withdrawals/Refunds

IX. Disability Retirement Benefits and Estimates

X. Retirement BenefitsA. Defined Benefit Program

B. Defined Contribution Plans

XI. Deaths/Survivor Benefits

4251

0011 0010 1010 1101 0001 0100 1011

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Operational Risks Cont’d

XII. ActuaryA. Assumptions

B. Assets/Liabilities

C. Actuarial Computer Program (Algorithm)

D. Data

E. Employer Contribution Rates

F. Second Opinion

G. Employer Contract Changes-Cost of Providing Estimates of Potential Changes to the Benefit Structure

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Operational Risks Cont’d

XIII. Communication with EmployersA. Employer Responsibilities

B. Member Services

C. Contribution Rates

D. Contributions

E. Employer Contract Amendments

XIV. Contracting with Suppliers of Goods and Services

A. Operations Contracts

B. Third-Party Administrator (TPA) Contracts

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Operational Risks Cont’d

XV. Business Continuity PlanningXVI. Cash ForecastingXVII. Depositing CashXVIII. Managerial Accounting &

ReportingXIX. Financial Accounting &

Reporting by Management

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Operational Risks Cont’d

XV. External Audit Risks

XVI. Internal Audit Risks

XVII. Consultants

XVIII. Information Systems and Acquisition

XIX. Information Security

XX. Legal Services

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Questions?

Thank You for Your Time!!