REPORT DIGEST

STATE UNIVERSITIES RETIREMENT SYSTEM

FINANCIAL AUDIT
For the Year Ended June 30, 2014

Release Date:  January 22, 2015

FINDINGS THIS AUDIT:  1

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  0 -- 0 -- 0
Category 2:  1 -- 0 -- 1
Category 3:  0 -- 0 -- 0
TOTAL:  1 -- 0 -- 1

FINDINGS LAST AUDIT: 0

Category 1:	Findings that are material
weaknesses in internal control and/or a
qualification on compliance with State laws
and regulations (material noncompliance).
Category 2:	Findings that are significant
deficiencies in internal control and
noncompliance with State laws and regulations.
Category 3:	Findings that have no internal
control issues but are in noncompliance with
State laws and regulations.

State of Illinois, Office of the Auditor
General
WILLIAM G. HOLLAND, AUDITOR GENERAL

To obtain a copy of the Report contact:
Office of the Auditor General, Iles Park
Plaza, 740 E. Ash Street, Springfield, IL
62703
(217) 782-6046 or TTY (888) 261-2887

This Report Digest and Full Report are also
available on the worldwide web at
www.auditor.illinois.gov

INTRODUCTION

This digest covers the financial statement
audit of the State Universities Retirement
System (System) as of and for the year ended
June 30, 2014.  The State Universities
Retirement System’s Compliance Examination
covering the year ended June 30, 2014 will be
issued in a separate report at a later date.

During fiscal year 2014 the System implemented
Governmental Accounting Standards Board (GASB)
Statement No. 67, Financial Reporting for
Pension Plans.  Implementation of the new
statement requires the System to disclose the
total pension liability and net pension
liability in the financial statement notes as
well as other related information as required
supplementary information.  The System’s total
pension liability is $39.182 billion at June
30, 2014.  The net pension liability at June
30, 2014 is $21.791 billion, which is the
difference between the System’s fiduciary net
position of $17.391 billion and the total
pension liability.  The System’s funded ratio
is 44.39%.  The criteria used for computing
pension liability information in the financial
report in accordance with GASB Statement No.
67 differs from the criteria used to compute
the actuarial accrued liability and actuarial
unfunded liability under the State’s funding
plan.  The pension information under the
State’s funding plan is no longer reported in
the financial statements.


FINDING SYNOPSIS

• (14-1) The State Universities Retirement
System has weaknesses in controls over
creditable earnings and member census data
reported by its employers.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

CONTROLS OVER CENSUS DATA

The State Universities Retirement System
(System) has weaknesses in controls over
creditable earnings and member census data
reported by its employers.

During testing of System’s internal controls
over creditable earnings and member census
data, it was noted that the information was
accumulated from multiple participating
employers which increased the likelihood of
errors in the data.

The System’s current processes and controls
for verifying the data rely on the reporting
of the information by the participating
employers, and there are limited controls in
place by the System to verify the creditable
earnings and member census information.

System officials indicated the System did not
believe it was necessary to perform on-site
employer visits to verify census data for
active members. (Finding 1, pages 38-39)

System officials concurred with our finding
and stated they will contract for employer
audit services this year to test control
systems and verify census data including
creditable earnings.  In addition, the System
will examine current processes and procedures
to determine if the System could independently
verify some or part of the census data with
members or with vendors for the entire
membership.

AUDITOR’S OPINION

Our auditors stated the financial statements
of the State Universities Retirement System as
of June 30, 2014, and for the year then ended,
are fairly stated in all material respects.

WILLIAM G. HOLLAND
Auditor General

WGH:TLK

SPECIAL ASSISTANT AUDITORS

Our Special Assistant Auditors for this audit
were McGladrey LLP.