A Financial Audit
A Report on the Audit of the Employees Retirement System’s Fiscal Year 2018 Employer Pension and Other Post-employment Benefits Schedules
July 2019
Summary Analysis
In our audit report dated June 14, 2019, we concluded that the Employees Retirement System’s (the System) Schedule of Employer Allocations and the Schedule of Collective Pension Amounts (Pension Schedules); and Schedule of Employer Allocations for the Other Post-employment Benefits (OPEB) and the Schedule of Collective OPEB Amounts for the OPEB Fund (OPEB Schedules) for the fiscal year ended 2018 were materially correct and presented in accordance with accounting principles generally accepted in the United States of America. The System published our audit reports as part of its Schedules, which it has posted on its Web site at https://ers.texas.gov/About-ERS/GASB-Requirements.
We also issued a report on internal control over financial reporting and on compliance and other matters of the OPEB liability schedules as required by auditing standards. In that report, auditors determined that the System had material errors in its Schedule of Collective OPEB Amounts for the Deferred Outflows of Resources and Deferred Inflows of Resources amounts totaling $7.54 billion. As a result, auditors identified material weaknesses in the System’s internal control because the System’s procedures indicated to use an incorrect table from the actuary report to prepare the Schedule. Those errors were corrected before the System finalized the Schedule.
Jump to report on control and compliance
The System did not accurately report the components of, and totals for, the Deferred Outflows of Resources and the Deferred Inflows of Resources amounts in its Schedule for fiscal year 2018. Although the System has a process to prepare, review, and approve the Schedule amounts, the System’s procedures indicated to use an incorrect table from the actuary report to prepare the Schedule. Specifically, the System recorded the changes for each component for the fiscal year instead of the total balance of the components for Deferred Outflows of Resources and Deferred Inflows of Resources, as required by GASB No. 75. As a result, the fiscal year 2018 Schedule was understated by a total of $7.54 billion.