Report No. 2010-128
October 2010
Complete Audit Report

Findings in the audit of the Missouri Department of Transportation and Highway Patrol Employees’ Retirement System

Investment Manager Hiring
The Missouri Department of Transportation and Highway Patrol Employees' Retirement System Board of Trustees (Board) did not follow its investment policy when hiring an investment manager. In November 2008, the Board voted to invest $15 million with a new private equity fund manager although the Executive Director, Chief Investment Officer, and investment consultant all opposed the investment. As required by the Board's investment policy, investment manager hiring decisions are typically made by the Chief Investment Officer and investment consultant with approval of the Executive Director, and supported by a detailed hiring report provided to the Board. However, this investment manager was hired directly by the Board, a hiring report was not prepared, and the related Board meeting minutes contained no documentation of the Board's decision process or rationale for its decision. In addition, the Board did not comply with state law when holding the closed meeting at which the investment manager was hired.

Travel Expenditures
As noted in our prior audit report, the Board has not established limits for travel expenses such as lodging and meals, or sufficient procedures for ensuring these costs are reasonable. Travel expenses are incurred for various purposes including Board meetings, Board member and employee training, conferences, member and retiree seminars, and due diligence trips to monitor the system's external service providers. Travel expenditures totaled approximately $241,000 during the 3 years ended June 30, 2009. Our review noted instances where lodging and meal reimbursements appeared excessive and/or exceeded federal employee per diem maximums established by the federal government.

Complete Audit Report
Missouri State Auditor's Office
moaudit@auditor.mo.gov