Report No. 2010-13
January 2010
Complete Audit Report

Findings in the audit of the County Employees' Retirement Fund

Credit Card and Travel Expenditures
The County Employees' Retirement System's Board of Directors (Board) has inadequate controls and procedures over credit card and travel expenditures. The Board has not established a policy regarding credit cards, and current procedures to review credit card purchases are not effective. As a result, some personal purchases made were not identified and reimbursed to the system by the Executive Director, and some payments were made without adequate supporting documentation. The system had not detected the unreimbursed personal purchases because procedures requiring submission of supporting documentation for all credit card purchases were not followed, and the Board did not review the Executive Director's credit card purchases.

The Board has not analyzed the need for issuing most employees a credit card, based upon employee use, and excessive spending limits have exposed the system to unnecessary liability. The Board has discontinued meal limits, and limits or guidelines for lodging expenses have not been established. Our review noted instances where meal and lodging reimbursements exceeded meal allowances in effect at the time and/or federal employee per diem maximums established by the federal government. We also noted expense reports that did not contain documentation of supervisory approval. In addition, the Board has not established a policy for providing employee meals while not on travel status.

Executive Director's Contract
The Board does not have a current formal written employment contract with the Executive Director. The Executive Director indicated an employment contract was established in 1999 when she was hired; however, the contract has never been updated and could not be located. In December 2007, the Board approved the renewal of the Executive Director's employment contract for 3 years; however, a formal written contract was not established or updated.

Professional Services Contracts
As noted in previous audits, the Board has not periodically solicited proposals for most professional services. The Board has contracted with the same actuarial consultant since 2002, and entered into a contract with an investment manager transition consultant in 2008, without soliciting proposals for these services. Proposals for some professional service providers currently in use, such as the investment consultant, legal counsel, auditor, legislative consultant, and custodial bank, have not been solicited for 7 to 14 years. In addition, the Board contracted with the custodial bank to implement and administer a securities lending program, without soliciting proposals for these additional services.

Gifts from Third Parties
System officials indicated, and our follow up on travel expenses confirmed, that Board members and employees periodically receive paid travel expenses (e.g. meals and lodging) from their investment consultant and investment managers while attending conferences or conducting monitoring reviews. The Board has not established a policy outlining the types of gifts, if any, that employees can or cannot accept from third parties that do business with retirement systems. In addition, the Board has not established a system for reporting and monitoring gifts received by Board members and employees.

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