Finding Text
Texas County & District Retirement System (TCDRS) Contribution Calculations Criteria: A sound system of internal control over payroll and pension reporting includes accurate calculation and reporting of employee and employer retirement contributions in accordance with plan requirements. Condition: During audit procedures, we noted inconsistencies in the determination of gross compensation used to calculate employee and employer contributions to the TCDRS pension plan. Specifically, certain components of compensation, such as vehicle and cell phone allowances, were inconsistently included in eligible wages reported to TCDRS. Of 24 payroll items tested seven instances were identified in which amounts reported to TCDRS did not agree to underlying payroll records. Of those exceptions, one employee contribution was calculated above the required contribution rate and six employee contributions were calculated below the required contribution rate. Cause: The condition resulted from insufficient review procedures and inconsistent application of eligible compensation definitions used in calculating TRS contributions. Effect: Inaccurate determination and reporting of eligible compensation may result in incorrect employee and employer retirement contributions, required corrections and potential noncompliance with TCDRS reporting requirements. Recommendation: We recommend the District strengthen internal controls over payroll processing and TCDRS contribution calculations by establishing a clearly defined and consistently applied methodology for determining eligible compensation. for TCDRS purposes. We also recommend implementing a secondary review process to reconcile payroll records to amounts reported to TCDRS prior to submission. Views of Responsible Officials and Planned Corrective Action: Management acknowledges the need to strengthen internal controls over the calculation and reporting of TCDRS contributions. The District will implement enhanced review procedures to ensure consistency in the definition and application of eligible compensation and will improve reconciliation processes between payroll records and TCDRS reporting.