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An Informational Summary of Internal and Independent Audit Reports for the
Texas Mutual Insurance Company
December 2001
Report Number 02-011
Overall Conclusion
The Texas Mutual Insurance Company (Company), formerly the Texas Workers' Compensation Insurance Fund, received an unqualified opinion on its financial statements for the year ended December 31, 2000, from its independent auditor. The Company's independent auditor did not issue a management letter. Management letters are issued when identified findings are significant enough to bring to management's attention.
While the Company's independent auditor brought no financial findings to management's attention, the Company's internal audit division (internal audit) identified significant operational findings during fiscal year 2000.
Key Facts and Findings
- Regulatory Compliance - The Company was not consistently complying with Workers' Compensation Commission regulations regarding the payment of attorney fees and impairment income benefits. As a result, the Company could have been subject to fines of up to $5,000 per occurrence of late or inaccurate payment.
- Claim Payments - There was a risk that company staff could have processed fraudulent claim payments.
- Third-Party Collections - The Company was exposed to the possibility of fraud by third-party collection agencies and law firms because there was no method to ensure third parties submitted all funds they collected on behalf of the Company.
- Accounts Payable - Communication issues between the information technology
and accounts payable departments resulted in an unbalanced general ledger
on at least two occasions in 1999 and the preparation and mailing of inaccurate
IRS Form 1099s.
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