Financial Audit

Pension Benefit Guaranty Corporation's 1993 and 1992 Financial Statements Gao ID: AIMD-94-109 May 4, 1994

This report presents GAO's opinion on the financial statements of the Single-Employer Fund and the Multiemployer Fund for fiscal years 1993 and 1992. These financial statements are the responsibility of the Pension Benefit Guaranty Corporation, which runs the funds. Because of the Corporation's continuing progress in improving internal controls, GAO was able, for the first time, to evaluate each of the Corporation's financial statements for fiscal year 1993. Although material internal control weaknesses continue to affect both funds, the Corporation is working to resolve this problem. This report also includes GAO's recommendation to improve the Corporation's internal control structure and discusses GAO's continuing concerns about the long-term viability of the Single-Employer Fund and weaknesses in employee benefit plan audits and reports.

GAO found that: (1) PBGC financial statements for the years ended September 30, 1993 and 1992 were reliable in all material respects and presented fairly the funds' financial position in accordance with generally accepted accounting principles; (2) PBGC internal controls were not adequate to ensure that transactions were properly recorded, processed, and summarized in accordance with generally accepted principles, and to maintain accountability for assets among funds; (3) there was no evidence of material noncompliance with applicable laws and regulations; (4) the Single-Employer Fund's long-term viability was jeopardized by underfunding and a not-fully-risk-related premium structure; (5) weaknesses existed in the scope and quality of employee benefit plan audits and reporting; and (6) it could not audit the Multiemployer Fund's future financial assistance liability because it had incomplete information on certain financially troubled pension plans.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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