Concerns About the Long-term Viability of the Single-Employer Fund

The Single-Employer Fund is able to meet its near-term benefit obligations because premium receipts presently exceed benefit payments and the Fund held investments having a market value of $7.2 billion and cash of $627 million at September 30, 1994. Material Internal Control Weaknesses

Our work disclosed that the Corporation has continued to make progress in improving internal controls affecting its financial reporting. However, as of September 30, 1994, material weaknesses continued to exist in the Corporation’s internal control structure in the three areas reported in our previous audits: weaknesses in financial systems and related internal controls, inadequate controls over the assessment of the Multiemployer Fund’s liability for future financial assistance, and inadequate controls over nonfinancial participant data. Through substantive audit procedures, we were able to satisfy ourselves that the weaknesses discussed below did not have a material effect on the fiscal year 1994 and 1993 financial statements of the Single-Employer and Multiemployer Funds. Inadequate Controls Over Nonfinancial Participant Data

As previously reported, the Corporation’s controls did not ensure the accuracy of nonfinancial participant data entered into the Pension and Lump Sum (PLUS) system. 95-5/23083-1. However, controls in effect on September 30, 1994, provided reasonable assurance that assets were safeguarded against loss from unauthorized use or disposition and that transactions were executed in accordance with management’s authority and significant provisions of selected laws and regulations. We are also responsible for testing compliance with significant provisions of selected laws and regulations and for performing limited procedures with respect to certain other information appearing in this financial statement.
Why GAO Did This Study

Pursuant to a legislative requirement, GAO audited the Pension Benefit Guaranty Corporation's (PBGC) Single-Employer Fund and Multiemployer Fund for the fiscal years ended September 30, 1994 and 1993 and evaluated PBGC internal controls and compliance with laws and regulations.

What GAO Found

GAO found that: (1) PBGC financial statements were reliable in all material aspects; (2) weaknesses in PBGC internal controls did not have a material effect on the Corporation's financial statements; (3) PBGC internal controls did provide reasonable assurance that assets were safeguarded from material loss and transactions were executed in accordance with managerial and legal requirements; (4) there was no reportable noncompliance with laws and regulations; (5) while the Single-Employer Fund is able to meet its near-term benefit obligations, it has an unfunded deficit of $1.2 billion; and (6) PBGC has made progress in improving internal controls, but weaknesses remain in financial systems, controls over the assessment of the Multiemployer Fund's liability for future financial assistance are inadequate, and controls over nonfinancial participant data entered into the Pension and Lump Sum system are also inadequate.