Employees Retirement System
An Opinion Audit on the Employees Retirement System of Texas
Report Number 95-116
At August 31, 1994, the Employees Retirement System (System) had total assets of $10 billion, paid $420 million in retirement benefits, and incurred insurance benefit costs of $813 million.
The fiscal year 1994 component unit financial statements of the System are in compliance with generally accepted accounting principles and are correct in all material respects.
The System has not earned an estimated $500,000 in interest on a net underpayment of $14.6 million of uncollected insurance revenues. The System did not promptly resolve significant recorded underpayments and overpayments by participating agencies and universities.
The System's method of allocating assets and income for the $10 billion investment pool does not ensure that all pension plans equitably share in the risks and rewards of all types of investments in the pool.
Reconciliations between the System's accounting records and the investment custodian for the new international stock portfolio, which was implemented February 1, 1994, were not prepared during the year. Reconciliations for other investment portfolios were prepared, on average, more than two months after the end of the month, and many were not reviewed for six months.
The System did not have any method of forecasting dividends on international stocks during the year. There were also inaccuracies in forecasting dividends on domestic stocks. During fiscal year 1994, the System received over $98 million in dividend income.
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