Office of the Fire Fighters' Pension Commissioner
An Audit Report on Management Controls
October 1997
Report Number 98-003
Overall Conclusion
The Commissioner and Board of Trustees of the Office of the Fire Fighters' Pension Commissioner (Commission) have not demonstrated the ability to establish effective control over critical Commission functions. We believe that external intervention is necessary to establish adequate control over the $20 million Texas Statewide Volunteer Fire Fighters' Retirement Fund. We recommend that state oversight officials consider mandating adequate controls over the critical functions of the Commission.
Key Facts and Findings
The Commissioner implemented some of the recommendations we made to address control issues identified during the course of this review. However, the Board of Trustees (Board) and Commissioner have a pattern of operating in ways that show inadequate attention to establishing proper controls. The result of this pattern has been that the responsibility for recommending and monitoring effective controls has largely fallen on the auditors.
The Commission did not establish effective contract administration controls over its investment activities, including controls over contractor selection, contract provisions, contract payment methodology, and contractor oversight. The absence of such oversight constitutes a material weakness in the Commission's overall control environment.
The Board failed to provide adequate governance and oversight for Commission activities. Failure to disclose business relationships between Board members and the Fund's consultant did not comply with the Board's ethics policy and could give rise to the appearance of a conflict of interest. The Board's approval of changes to critical Commission functions was made without adequate time for deliberation and was based on limited information.
The Commission did not follow state law, which requires trust funds to transfer uninvested cash to the State Treasury prior to reinvesting it. Transferring cash balances to an account at the State Treasury would also improve control over fee payments to contracted investment providers.
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