Increased Oversight, Internal Controls and Performance Accountability Needed for PBGC's Monitoring, Enforcing and Modifying Negotiated Funding Agreements (AUD-2014-8/PA-11-80),issued March 21, 2014

This audit reviewed the effectiveness of PBGC's processes for monitoring, enforcing and modifying negotiated funding agreements that PBGC enters into with plan sponsors of defined benefit pension plans; the purpose of a funding agreement is for sponsors to provide additional funding to the plans. We also assessed internal controls, transparency, and overall accountability, and PBGC's use of information technology, including protection of sensitive information entrusted to it. This review encompassed agreements in effect between FY 2000 and FY 2012.

We found that PBGC operated its negotiated funding agreement activity without clearly defined objectives or documented operating procedures. The Corporation viewed each agreement as a unique negotiation and lacked a programmatic view of the activity. As a result, the Corporation operated the negotiated agreements program with a variable approach which lacked consistent standards, internal controls, and meaningful evaluation of the agreements over time. We recognized that PBGC began documenting procedures and internal controls during the course of the audit.

PBGC agreed with all eight OIG recommendations. Overall, we recommended PBGC establish a program whereby agreements are monitored, enforced and modified under uniform guidelines, implementation of metrics to assess the effectiveness of agreements, increased transparency regarding the outcome of agreements, and increased access controls for the system used to track agreements.