G.E. PENSION FUND BACKGROUND The Laws of Florida, Chapter 23559 as amended, provide for the establishment, operation, and administration of the City of Tampa General Employee Pension Fund. The seven member Board of Trustees is responsible for the administration of the Pension Fund. The Pension Office is located in the Department of Revenue and Finance and the Pension Secretary reports to the Board of Trustees and the Chief Accountant. The Department of Revenue and Finance is responsible for the bookkeeping of the fund’s assets. Sun Bank has custody of the Fund’s assets which consists of Bonds (rated A or higher), and stocks traded on the NYSE. The assets are balanced 35% bonds and 65% stocks. The Fund cannot invest in foreign securities. These rules are established by Chapter 23559 referenced above. As of June 30, 1996, the fair market value of the Pension Fund’s investment’s totaled $347 million. There were 1,533 active retirees and/or beneficiaries receiving pension benefits. There are two types of retirement plans: Division A (contributory, defined benefit plan) and Division B (noncontributory, defined benefit plan). Both plans have benefits for longevity and disability. Plan A is closed and eventually will disappear. Plan A has not accepted members since before October 1, 1981. SCOPE This audit will review activity from January 1, 1994, through June 30, 1996. PLANNING 1. Prepare entrance letter and send it to the Finance Director and the Chairman of the Pension Fund. 2. Arrange and hold an entrance conference with the above and obtain the Pension Fund’s Procedural Manual, a copy of the governing state laws, and any documentation on procedures that the Department of Revenue and Finance might have. Ask for a designated contact person that can assist in the from the department side. Also, arrange for working space at the Pension Office. 3. Conduct a preliminary survey in order to gain an understanding of the subject matter under audit. 4. Provide a copy of the survey narratives to the auditee for review. Make changes as necessary. 5. Perform a risk analysis listing items that could be potential weaknesses and also list the corresponding internal controls that would minimize the risk. List any compensating controls that might work in combination with existing controls to minimize risk. 6. Based upon the risk analysis and the understanding gained during the preliminary survey, discuss with the Audit Supervisor and carry findings to the RAF (record of audit finding) form in the workpapers. 7. Prepare the audit program and include a time budget for each step. 8. Submit workpapers to the Audit Supervisor for review. 9. Clear any review notes and make changes, if necessary. OBJECTIVE # 1 Determine that pensioners who applied for deferred retirement were eligible for benefits in compliance with the Laws of Florida, Chapter 23559, and were properly coded on the pension system. 10. Obtain a listing of pensioners approved between January 1, 1994 and June 30, 1996. 11. Using the random number generator, select a sample of 30 deferred retirees. Note: A deferred pension is available for someone who is vested (10 years active service is the minimum vesting time) in the Pension Fund. For Plan A, a person qualifies for a deferred pension if they are vested and are less that 55 years of age. For Plan B, a person qualifies for a deferred pension if they are vested and are less that age 62. They can start drawing a pension when they meet the age requirement while working for another entity. 12. Schedule the following information for each deferred retiree selected: a. Name, and employee number b. Date of retirement, and date of birth c. Date of employment d. Department and division that they worked in e. Amount of pension deferred 13. Review pension files for the following documented criteria: a. Evidence of at least 10 years total service b. Proof of age (to be in compliance with established criteria) c. Proof of identity d. Copy of social security card, and spouse’s social card, if applicable e. Marriage license, if applicable f. Health and life insurance enrollment card (signed) h. Completed and signed W-4P I. Completed and signed application to retire. j. Review the pension system ensure that deferred retirees were coded to avoid issuance of payments 14. Trace approval to Board minutes. Review for payment start date to ensure it occurs after Board approval and once the applicant attains the proper age. 15. Recalculate pension amount. Ensure that calculation was reviewed by payroll personnel. The pension is calculated by the Pension Secretary (a degreed accountant). Review is essential to ensure accuracy. 16. Summarize and conclude. OBJECTIVE # 2 Determine that the pension status for pensioners who retired prior to January 1, 1994 was still valid, or if it had changes the City was properly notified and payments modified accordingly. A Change in status can result in the death of a retiree, with or without a surviving spouse, or minor children. There are different combinations of status changes. Plan A and B have some differences when it comes to benefits paid to surviving spouses. 17. Randomly select 50 retirees whose alphabet began with I through Z (A through H being verified by the Pension Office) and who retired prior to January 1, 1994. 18. Mail positive confirmation letters to the sample selected, providing for a 10 business day response deadline. 19. Upon receipt of the confirmation letters from a retiree, ensure that the signature on the letter and the one one the initial application is the from the same person. 20. If a change in status is indicated on the confirmation, review the status in the pension system to determine if a change has been entered. 21. After expiration of initial 10 business days, send a second request providing for an additional 5 business days to reply. After this time has expired perform alternate procedures by contacting the retiree either by telephone or visit. Turn over unresolved issues to the Pension Office for follow-up. 22. Summarize and conclude. OBJECTIVE # 3 Determine that payments released to pensioners, where contact appeared to be lost, was properly documented. 23. Review documentation for instances where payments were held for pickup. 24. Document the method of verifying that the individual pensioner was getting the check. 25. Summarize and conclude. OBJECTIVE # 4 Determine that the Pension Fund was administered in accordance with the Pension Act and related State Laws. 26. Identify the Board of Directors method of ensuring adherence to the requirements of the law. a. Review Board minutes to ensure compliance with standards and procedures which are described in the Board’s Procedures Manual. 27. Determine if the Pension Board: a. Retained services of one or more nationally recognized professional investment counselors; or a state or national bank with not less that $10 million in capital and no less that $150 million in trust assets or no less that 500 trust accounts. b. Obtain a written opinion from an investment counselor on the overall condition and composition of the investment portfolio no less that once each six months. WRAP-UP 28. Complete and organize the working papers. 29. Prepare a preliminary draft of the audit report and turn in to the Audit Supervisor for review. 30. Clear review notes and make changes as appropriate. 31. Send a copy of the draft report to the Fire and Communications Chief for written responses. 32. Schedule an exit conference, if necessary. 33. Incorporate auditee’s responses into the final report and send to the printer.