Teachers' Retirement Division, Department of Administration financial-compliance audit for the two fiscal years ended June 30 ..

48 Pages·1996·1.2 MB·English

by  Montana. Legislature. Legislative Audit Division

s
353.54
L72TRSf
2006
Legislative Audit Division
State ofMontana
Report to the Legislature
Financial-Compliance Audit
December2006
For the Two Fiscal Years Ended June 30, 2006
STATE DOCUMENTS COLLECTION
DEC 2 G 2006
MONTANA STATE LIBRARY
IF 5 E. Cth AVE.
HELENA. MONTANA SPfi.-'O
Teachers' Retirement System
Department ofAdministration
A component unit ofthe state ofMontana
This report contains the financial statements and our independent
auditor's report forthe Teachers' Retirement System for the two fiscal
years ended June 30, 2006. The report contains one recommendation
concerning the actuarial soundness ofthe retirement system.
Direct comments/inquiries to:
Legislative Audit Division
Room 160, State Capitol
PO Box 201705
MT
06-09 Helena 59620-1705
Help eliminate fraud, waste, and abuse in state government. Call the Fraud Hotline at
1-800-222-4446 statewide or444-4446 in Helena.
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FINANCIAL-COMPLIANCE AUDITS
Financial-compliance audits areconducted bythe Legislative Audit Divisionto determine ifan
agency's financial operations areproperly conducted, the financial reports are presented fairly,
andthe agencyhas complied withapplicable laws andregulations. Inperforming the audit work,
the audit staffuses standards set forthby the American Institute ofCertified Public Accountants
and the United States Government Accountability Office. Financial-compliance audit staff
members hold degrees withan emphasis in accounting. Most staffmembers hold Certified Public
Accountant (CPA) certificates.
Government Auditing Standards, the Single Audit Act Amendments of1996 and 0MB Circular
A-133 require the auditorto issue certain financial, internal control, and compliancereports. This
individual agency audit report is not intended to complywiththese reporting requirements and is
therefore not intended fordistributionto federal grantor agencies. The Legislative Audit Division
issues a statewidebiennial Single Audit Report whichcomplies withthe above reporting
requirements. The Single Audit Report forthe two fiscal years ended June 30, 2007, will be
issuedby March 31, 2008. The Single Audit Report forthe two fiscal years ended June 30, 2005,
was issued on March 6, 2006. Copies ofthe Single Audit Report canbe obtained by contacting:
Single Audit Coordinator Legislative Audit Division
Office ofBudget and ProgramPlanning Room 160, State Capitol
State Capitol PO Box 201705
HelenaMT 59620 HelenaMT 59620-1705
Phone [phone]
MEMBERS OF THE LEGISLATIVE AUDIT COMMITTEE
LEGISLATIVE AUDIT DIVISION
Scott A. Seacat, LegislativeAuditor Deputy Legislative Auditors:
Tori Hunthausen, James Gillett
ChiefDeputy Legislative Auditor JimPellegrini
December 2006
The Legislative Audit Committee
ofthe Montana State Legislature:
This is our financial-compliance audit report ontheTeachers' Retirement System (system), a
component unit ofthe state ofMontana, forthetwo fiscal years endedJune 30, 2006. This report
contains onerecommendation related to the actuarial soundness ofthe system.
We issued an unqualified opiniononthe system's financial statements forthe fiscal years ended
June 30, 2006, and 2005. Our opinion onthe system's financial statements is also contained in
the Teachers' Retirement System annual report. The annual report contains additional
background, statistical, and actuarial information not included in this audit report, which may be
ofinterest to legislators orthe public. Copies ofthe annual report can be obtained from the
Teachers' Retirement System or accessed on its website. The annual report for fiscal year
2005-06 is expectedto be available in December2006.
The system's written responseto the audit is includedat the end ofthe audit report. We thankthe
Executive Directorand his stafffortheirassistance and cooperation throughout the audit.
Respectfully submitted.
Scott A. Seacat
Legislative Auditor
Room 160 StateCapitol Building PO Box 201705 • Helena, MT- 59620-1705
Phone[phone] • FAX[phone] • E-Mail [email protected]

Legislative Audit Division
Financial-Compliance Audit
For tiie Two Fiscal Years Ended June 30, 2006
Teachers' Retirement System
Department ofAdministration
A component unit oftlie state ofMontana
Members ofthe audit staffinvolved in this audit wereJeane Carstensen-Garrett,
Paul J. O'Loughlin, Delsi Plummer, and Melissa Soldano.
Digitized by the Internet Archive
in 2010 with funding from
IVIontana State Library
http://www.archive.org/details/teachersretireme2006mont
Table of Contents
Appointed and Administrative Officials ii
Report Summary S-1
Introduction
1
General
1
Background
1
PriorAudit Recommendations 3
Findings and Recommendations 5
SystemNot Actuarially Sound 5
Independent Auditor's Report A-1
Independent Auditor's Report A-3
The Teachers' Retirement System Management's Discussion and Analysis, Financial
Statements, Required Supplementary Information, and Supplementary Information
Management's Discussionand Analysis A-5
Statement ofFiduciaryNet Assets
June 30, 2006 and 2005 A-7
Statement ofChanges in FiduciaryNet Assets
Fiscal Years Ended June 30, 2006 and 2005 A-8
Notes to the Financial Statements A-9
Schedule ofFunding Progress A-I8
Schedule ofContributions from the Employer
and Other Contributing Entities A-19
Notes to the Required Supplementary Information A-20
Supporting Schedule
Fiscal Years Ended June 30, 2006 and 2005 A-22
System's Response B-1
Teachers' Retirement System B-3
Page
i
Appointed and Administrative Officials
Teachers' Retirement Board
Scott Dubbs, Chair
Kari Peiffer, Vice Chair
Mona Bilden
Darrell Laymen
Tim Ryan
James Turcotte
Administrative Officials David L. Senn, ExecutiveDirector
Tammy Rau, DeputyExecutive Director
Dan Gaughan, Accounting/Fiscal Manager
Foradditional information concerning the
Montana Teachers' Retirement System,
contact:
David L. Senn, ExecutiveDirector
1500 Sixth Avenue
PO Box 200139
MT
Helena 59620-0139
Report Summary
Teachers' Retirement This report documents theresults ofour financial-compHance audit
System
oftheTeachers' Retirement System (system) forthetwo fiscal years
endedJune 30, 2006. This report contains onerecommendation
related to the actuarial soundness ofthe system. The previous audit
report contained one recommendationrelatingto enacting legislation
for funding changes to ensure the system is funded on an actuarially
sound basis.
Systempersonnel preparethe financial statements fi-omthe
Statewide Accounting, Budgeting, and Human Resources System
(SABHRS) withadjustment. We issuedan unqualified opinionon
the financial statements presented in this report, whichmeans the
readercan rely onthe financial informationpresented.
The listingbelow serves as a means ofsummarizing the
recommendation contained inthe report, the system's response
thereto, and a referenceto the supporting comments.
Recommendation#1 Werecommend legislationbe enacted toprovide funding to ensure
theTeachers' Retirement System is fianded on anactuarially sound
basis, as required by the Montana Constitution
System Response Conditionally concur. SeePage B-3
:
Page S-1