A Report on the Audit of the Teacher Retirement System's Fiscal Year 2015 Financial Statements
December 2015
Report Number 16-009
Overall Conclusion
In our audit report dated November 18, 2015, we concluded that the Teacher Retirement System's (System) basic financial statements for fiscal year 2015 were materially correct and presented in accordance with accounting principles generally accepted in the United States of America. The System published our audit report as part of its basic financial statements, which it posted on its Web site at http://trs.texas.gov/global.jsp?page_id=/global/publications_all.
We also issued a report on internal control over financial reporting and on compliance and other matters as required by auditing standards (that report, including responses from management, is presented in the attachment). In that report, auditors determined that the System should strengthen controls over plan member census data to help ensure that data is complete and accurate.
Our procedures were not intended to provide an opinion on internal control over financial reporting or to provide an opinion on compliance with laws and regulations. Accordingly, we do not express an opinion on the effectiveness of the System's internal control over financial reporting or on compliance with laws and regulations.
Subsequent to the issuance date of the System's fiscal year 2015 financial statements, the System formed a private limited company, which will be wholly owned by the System, in the United Kingdom for the purpose of opening a London investment office that was expected to be operational in November 2015.
Testing of Plan Member Census Data
Auditors conducted census data testing for fiscal year 2015 as part of this audit. The completeness and accuracy of that data is important because the System’s actuary uses that data to calculate the System’s pension liability.
Auditors implemented a risk-based approach for selecting employers (including school districts, charter schools, education service centers, and higher education institutions) for fiscal year 2015 census data testing as required by American Institute of Certified Public Accountants (AICPA) guidance. That resulted in auditors selecting 89 employers for which census data was tested. (A list of the employers selected for testing is presented in the attachment.) Testing included reviewing documentation to verify that the census data that the employers submitted to the System was accurate. Based on the testing performed, auditors determined that the underlying census data was materially complete and accurate to support the System's plan's financial statement amounts. That was reflected as part of our unmodified audit opinion on the System's financial statements for fiscal year 2015. For fiscal year 2014, auditors tested the System's census data using the same methodology described above and concluded that the data was materially complete and accurate. The System intends to post the results of the census data testing for fiscal year 2014 on its Web site at http://trs.texas.gov.
Additionally, auditors will be issuing an opinion later this fiscal year on the System's fiscal year 2015 pension liability allocation schedules. Those schedules provide employers with the information they need to record their share of the pension liability in their financial statements, in accordance with AICPA requirements. Auditors previously issued an opinion on the System's pension liability allocation schedules for fiscal year 2014. The System published our audit report, along with the schedules, on its Web site at http://www.trs.state.tx.us/employers.jsp?submenu=gasb&page_id=/reporting/gasb_67_68.
Other Issues
Auditors communicated certain issues that were not material or significant to the audit objectives in writing to the System's management.
As required by auditing standards, we will also communicate to the System's board of trustees certain matters related to the conduct of a financial statement audit.