Audit of the Pension Benefit Guaranty Corporation’s Fiscal Year 2018 and 2017 Financial Statements (AUD-2019-1/FA-18-127-1), issued November 15, 2018
The Office of Inspector General issued the audit of the financial statements of the Single-Employer and Multiemployer Program Funds administered by the Pension Benefit Guaranty Corporation (PBGC) as of and for the years ended September 30, 2018 and 2017 finding:
- The financial statements were presented fairly, in all material respects, in conformity with accounting principles generally accepted in the United States of America. This is the 26th consecutive unmodified financial statement audit opinion.
- PBGC maintained, in all material respects, effective internal control over financial reporting as of September 30, 2018.
- PBGC continues to develop and execute corrective actions to remediate previously identified control deficiencies. PBGC management implemented certain corrective actions during FY 2018 that included enhancing the valuation tool to calculate its single largest liability, developing targeted financial analysis processes to mitigate financial reporting risks, and implementing IT solutions to mitigate system weaknesses.
- Although PBGC made some progress in these areas, the Corporation should continue to focus its efforts resolving the remaining outstanding significant control deficiencies: (1) Controls over the Present Value of Future Benefit (PVFB) Liability, (2) Present Value of Nonrecoverable Future Financial Assistance (PV NFFA), and (3) Access Controls and Configuration Management).
- Instances of noncompliance or other matters that are required to be reported in accordance with Government Auditing Standards.
- Potential Antideficiency Violation: In FY 2016, we reported, PBGC maintains operating leases for all office site locations and its COOP site and did not record its full contractual obligation under all of the multiyear lease arrangements. In FY 2017, PBGC general counsel reported the potential violation to the Office of Management and Budget and is currently awaiting a decision.
- In FY 2018, PBGC restructured two of six operating leases in response to the reported prior year potential violations. These two leases include contractual clauses requiring a period of six months’ notice prior to exercising funding options, including obligating funds, as well as availability of funds clauses. However, PBGC may not have provided sufficient written notice to its landlords regarding the availability of funds for the remaining leases. Consequently, PBGC may have violated a provision within the Antideficiency Act.