Commonwealth of Massachusetts | Public Employee Retirement Administration Commission
Five Middlesex Avenue, Suite 304, Somerville, MA 02145
Ph 617 666 4446 | Fax 617 628 4002 | TTY 617 591 8917 | www.mass.gov/perac
Domenic J. F. Russo, Chairman | A. Joseph DeNucci, Vice Chairman
Mary Ann Bradley | Paul V. Doane | Kenneth J. Donnelly | James M. Machado | Donald R. Marquis
Joseph E. Connarton, Executive Director
January 4, 2008
Mr. Timothy Bassett, Chairman
Essex Regional Retirement Board
Hawthorne Office Park
491Maple Street, Suite 202
Danvers, MA 01023-4025
REFERENCE: Report of the Examination of the Essex Regional Retirement System for the three-year period from January 1, 2003 through December 31, 2005
Dear Chairman Bassett:
The Public Employee Retirement Administration Commission has completed a follow-up review of the findings and recommendations contained in its audit report of the Essex Regional Retirement System for the most recent period referenced above. We conduct these visits as a regular part of the oversight process. They are designed to ensure the timely implementation of corrective action for the recommendations cited in that report. The examination addressed several specific findings and recommendations included in the audit report for the period referenced above. The results are as follows:
1. Accounting: The Audit Report cited a finding that pooled fund managers’ reports were not being reconciled with the general ledger and custodian statements. In addition, not all pooled fund fees were being accounted for separately, but were included in unrealized gain or loss.
Follow-up Result: An examination of the 2006 Annual Statement showed that pooled fund balances on the general ledger agreed with year-end managers’ statements, with one exception due to timing (September 30 balance in lieu of year-end). The Board is continuing to work with its pooled fund managers and consultant to obtain either actual fees or, when not available, best estimates. The finding is resolved.
2. Cash: The Audit Report cited a finding that the cash operating account balances reported on the Annual Statement and the general ledger were negative or in a deficit position.
Follow-up Result: Year-end 2006 and October 2007 cash operating account bank reconciliations reported positive balances on the general ledger, therefore reducing the likelihood of the risk of a bank overdraft situation. The finding has been resolved.
3. Membership: The Audit Report cited a finding that birth certificates for Option C beneficiaries were not on file and, therefore, their ages could not be verified to ensure accurate retirement calculations.
Follow-up Result: Beneficiary birth certificates were on file for all 2007 Option C retiree files sampled by the examiner. The finding has been resolved.
4. System Administration: The Audit Report cited a finding that Board Meeting minutes were not filed and signed in a timely manner.
Follow-up Result: Minutes of the latest Board meeting, November 28, 2007, were on file and those of previous meetings were on file and signed. The finding has been resolved.
The Commission wishes to acknowledge the significant effort demonstrated by the staff of the Essex Regional Retirement Board to correct the deficiencies cited in the most recent examination of the system.
Thank you for your continued cooperation in this important matter.
Sincerely,
Joseph E. Connarton
Executive Director