Serious internal control weaknesses continue to plague the Pension Benefit Guaranty Corp., according to an independent audit conducted for the agency’s inspector general by accounting firm Clifton Gunderson.
The fiscal 2011 report is the third consecutive one with adverse opinions related to three significant deficiencies at the PBGC.
One of those deficiencies noted in fiscal 2009 and 2010 reports, the integration of financial systems, showed improvement in fiscal 2011, but the auditors saw continued weakness in the areas of security management and access controls.
New problems identified in the latest report came from the benefits administration and payment department, where weak internal controls led to erroneous plan asset valuations and benefit calculations, among other issues. Many of what the report called “pervasive” internal control weaknesses in the BAPD were related to poor management of contractors, including those contractors involved in valuing plan assets when the PBGC assumed responsibility for terminated plans. The BADP is in the midst of a strategic review to address the systemic weaknesses identified, the audit report noted.
In a written response to PBGC Inspector General Rebecca Anne Batts included in the report, PBGC Director Joshua Gotbaum said agency officials “recognize and concur with your opinion on internal controls,” and said that earlier weaknesses were being addressed. Mr. Gotbaum also said the agency “will be developing a corrective action plan” for the new BAPD problems.
“When we find mistakes, we fix them,” Mr. Gotbaum said in a media statement.
He noted that the PBGC started a “top-to-bottom review” of how it values the assets in plans it assumes and related errors in benefit payments, and is revisiting work done for several plans terminated five to eight years ago. Officials declined to identify the plans involved in the review.
“One thing we will not tolerate is paying the wrong benefit,” Mr. Gotbaum said in the statement. “We are committed to do things right.”
The PBGC inspector general expects to release several plan asset audits before the end of the year, according to an official who did not want to be identified.