Employees Retirement System
A Review of Internal Controls of Certain Programs Administered by the Employees Retirement System of Texas
Report Number 95-143
The System should expand its list of approved foreign currency brokers to ensure that favorable exchange rates are obtained when trading foreign currency. The dollar amount of international securities traded in the first six months of fiscal year 1995 was $290 million.
The System has assurances of the safety of foreign held assets through its custodial trust agreement. Total market value of international securities held in foreign countries at March 9, 1995, was approximately $965 million. These securities were held in depositories in 16 different countries.
The System should strengthen controls to ensure that income deferral limitations established by federal statute (Internal Revenue Service Code) are not exceeded by participants in the Deferred Compensation Plan. The Deferred Compensation Plan had approximately 10,000 participants in the 457 Plan and 30,200 participants in the Texa$aver 401(k) Plan at August 31, 1994. At August 31, 1994, total market value of Deferred Compensation Plan assets was estimated at $214 million and $140 million for the 457 and 401(k) Plans, respectively.
The System does not receive assurances that the control structure over claims processing by its third-party administrator for the Flexible Benefits Plan is designed correctly and functions effectively. The System does not know if claims are being processed in accordance with federal and state law because it has not received any assurances about the design and effectiveness of the claims processing internal control structure used by the third party administrator. The Flexible Benefits Plan had 9,220 participants in the health care reimbursement plan and 2,568 in the dependent care reimbursement plan at August 31, 1994.
Management of the Employees Retirement System have generally established effective controls for the Flexible Benefits and Deferred Compensation Plans.
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