Public Employees Retirement Association 03-03
Office of the Legislative Auditor State of Minnesota
Financial Audit Division
The Office of the Legislative Auditor (OLA) is a professional, nonpartisan office
in the legislative branch of Minnesota State government. Its principal responsibility
is to audit and evaluate the agencies and programs of state government (the
State Auditor audits local governments). OLA's Financial Audit Division annually
audits the state's financial statements and, on a rotating schedule, audits
agencies in the executive and judicial branches of state government, three metropolitan
agencies, and several "semi-state" organizations. The division also investigates
allegations that state resources have been used inappropriately. The division
has a staff of approximately fifty auditors, most of whom are CPAs. The division
conducts audits in accordance with standards established by the American Institute
of Certified Public Accountants and the Comptroller General of the United States.
Consistent with OLA's mission, the Financial Audit Division works to:
· Promote Accountability, · Strengthen Legislative Oversight, and
· Support Good Financial Management.
Through its Program Evaluation Division, OLA conducts several evaluations each
year and one best practices review.
OLA is under the direction of the Legislative Auditor, who is appointed for a six-year term by the Legislative Audit Commission (LAC). The LAC is a bipartisan commission of Representatives and Senators. It annually selects topics for the Program Evaluation Division, but is generally not involved in scheduling financial audits.
All findings, conclusions, and recommendations in reports issued by the Office of the Legislative Auditor are solely the responsibility of the office and may not reflect the views of the LAC, its individual members, or other members of the Minnesota Legislature.
This document can be made available in alternative formats, such as large print, Braille, or audio tape, by calling 651-296-1727 (voice), or the Minnesota Relay Service at 651-297-5353 or 1-800-627-3529. All OLA reports are available at our Web Site: http://www.auditor.leg.state.mn.us
If you have comments about our work, or you want to suggest an audit, investigation, evaluation, or best practices review, please contact us at 651-296-4708 or by e-mail legislative.auditor@state.mn.us
Table of Contents
Report Summary
Report on Compliance and Internal Control Over Financial Reporting
Based on an Audit of Financial Statements Performed in Accordance With Government
Auditing Standards
Audit Participation
The following members of the Office of the Legislative Auditor prepared this report:
Claudia Gudvangen, CPA Deputy Legislative Auditor
David Poliseno, CPA, CISA Audit Manager
Patrick Phillips, CPA Auditor-In-Charge
Heather White Senior Auditor
Report Summary
Audit Conclusions
· We issued an unqualified opinion on the financial statements of the Public Employees Retirement Association as of and for the year ended June 30, 2002.
· We issued a Report on Compliance and Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards. We did not report any material weaknesses involving the internal control over financial reporting and its operation or noncompliance that would be required to be reported under Government Auditing Standards.
Background Information
The Public Employees Retirement Association (PERA) administers four separate funds: the Public Employees Retirement Fund (PERF); the Public Employees Police and Fire Fund (PEPFF); the Public Employees Correctional Fund (PECF); and the Public Employees Defined Contribution Plan (PEDCP). The PERF covers employees of counties, cities and townships, and employees of schools in non-certified positions. The PEPFF covers police officers and fire fighters. The PECF covers employees in county correctional institutions who have direct contact with inmates. The PEDCP covers elected local government officials except elected county sheriffs, emergency medical service personnel employed by or providing service to any of the participating ambulance services, and physicians employed at public facilities.
PERA served approximately 1,950 units of government and had 326,476 members in its four funds as of June 30, 2002. At June 30, 2002, PERA administered about $12.7 billion in net assets. For the year ended June 30, 2002, PERA received contributions of about $539.6 million and paid benefits and refunds of about $854.8 million.
Report on Compliance and Internal Control Over Financial Reporting
Based on an Audit of Financial Statements Performed in Accordance With
Government Auditing Standards
Senator Ann H. Rest, Chair
Legislative Audit Commission
Members of the Legislative Audit Commission
Members of the Public Employees Retirement Association of Minnesota Board of Trustees
Ms. Mary Most Vanek, Executive Director
Public Employees Retirement Association of Minnesota
We have audited the financial statements of the Public Employees Retirement
Association as of and for the year ended June 30, 2002, and have issued our
report thereon dated December 5, 2002. We conducted our audit in accordance
with auditing standards generally accepted in the United States of America and
the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States.
Compliance
As part of obtaining reasonable assurance about whether the Public Employees Retirement Association's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, and contracts, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the Public Employees Retirement
Association's internal control over financial reporting in order to determine
our auditing procedures for the purpose of expressing our opinion on the financial
statements and not to provide assurance on the internal control over financial
reporting. Our consideration of the internal control over financial reporting
would not necessarily disclose all matters in the internal
control over financial reporting that might be material weaknesses. A material
weakness is a condition in which the design or operation of one or more of the
internal control components does not reduce to a relatively low level the risk
that misstatements in amounts that would be material in relation to financial
statements being audited may occur and not be detected within a timely period
by employees in the normal course of performing their assigned functions. We
noted no matters involving the internal control over financial reporting and
its operation that we consider to be material weaknesses.
This report is intended solely for the information and use of the Legislative Audit Commission and the Public Employees Retirement Association, and is not intended to be and should not be used by anyone other than these specified parties.
James R. Nobles Claudia J. Gudvangen, CPA
Legislative Auditor Deputy Legislative Auditor
End of Fieldwork: December 5, 2002
Report Signed On: January 13, 2003