RD72 - Virginia Retirement System Report on Audit for the Year Ended June 30, 2014


Executive Summary:
Our audit of the Virginia Retirement System (Retirement System) for the year ended June 30, 2014, found:

• the financial statements are presented fairly, in all material respects;

• an instance of noncompliance or other matters required to be reported under Government Auditing Standards; and

• deficiencies in internal control that merit management's attention.

We have audited the basic financial statements of the Retirement System as of and for the year ended June 30, 2014, and issued our report thereon, dated December 11, 2014. Our report, included in the Retirement System’s Annual Report, is available at the Auditor of Public Accounts’ website at www.apa.virginia.gov and at the Retirement System’s website at www.varetire.org.

Comment to Management

In fall 2012, the Retirement System launched myVRS Navigator, a web?based benefits management system that allows agencies to immediately access and update member and agency related retirement data. The implementation of myVRS Navigator significantly changed the retirement contribution reporting process. Many of the responsibilities for managing member data shifted from the Retirement System to each employer. For state agencies, these changes have highlighted the interdependency of key Commonwealth information systems and the risks created when they are out of sync, while giving the agencies more tools to ensure their accuracy. Our report includes a comment to management discussing the importance of all Commonwealth agencies working to ensure the accurate management of member data.

Member data supports retirement contribution calculations and payments throughout the year and provides the foundation for the actuarially based calculations currently reported in the footnotes of the Retirement System, the Commonwealth, and other non?state participating employers’ Comprehensive Annual Financial Reports. Beginning in fiscal year 2015, due to the implementation of Governmental Accounting Standards Board’s (GASB) Statement No. 68, "Accounting and Financial Reporting for Pensions – An Amendment of GASB Statement No. 27, the pension liability will be reported within all employers’ basic financial statements, including the Commonwealth’s, as well as in the financial statements of any individual state agencies who issue them.

The comment to management focuses specifically on state agencies who use the Commonwealth’s Personnel Management Information System (PMIS) and the Commonwealth Integrated Payroll and Personnel System (CIPPS). However, given the ramifications of GASB Statement No. 68, all employers participating in the plans administered by the Retirement System should remain cognizant of their responsibility for ensuring the accuracy of member data and retirement contributions submitted to the Retirement System.