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
Paul V. Doane | James M. Machado | Donald R. Marquis | Robert B. McCarthy | Gregory R. Mennis
Joseph E. Connarton, Executive Director
October 25, 2010
Mr. Francis E. Delano, Jr., Chairman
Swampscott Retirement Board
Town Hall
22 Monument Avenue
Swampscott , MA 01907
REFERENCE: Report of the Examination of the Swampscott Retirement Board for the two-year period from January 1, 2007 through December 31, 2008.
Dear Mr. Delano:
The Public Employee Retirement Administration Commission has completed a follow-up review of the findings and recommendations contained in its audit report of the Swampscott Retirement Board 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 seven specific findings and recommendations included in the audit report for the period referenced above. The results are as follows:
1. The Audit Report noted that the attendance rate at the regularly scheduled monthly meetings for several Board members was below the level considered reasonable during the audit period.
Follow-up Result: The minutes since the previous audit were inspected. Currently, the ratio of Board members attending meetings disclosed no attendance issues. All Board members have made a concerted effort to attend all scheduled meetings and participate fully in the deliberations as reflected in the official minutes. This finding is considered to be resolved.
2. The Audit Report cited a finding that the system had incurred expenses that were not an appropriate use of retirement funds. Penalties were imposed for filing deficiencies related to benefits paid and a similar observation in the previous audit had not been sufficiently corrected.
Follow-up Result: The system has made a concerted effort to control the expenses specifically cited in the audit report as well as similar penalties imposed due to filing deficiencies. They have also experienced savings from a reduction in discretionary expenses attributed to the relocation to Town Hall. This finding is considered to be resolved.
3. The Audit Report cited a finding that the internal financial controls evident within the system were not adequate to avoid late payment and penalty fees particularly in reference to Credit Card charges and related activity.
Follow-up Result: The system does not currently use any credit card for any ordinary business purposes. The previous card was cancelled and there are no plans to reapply for any similar purchase option. This finding is considered to be resolved.
4. The Audit Report noted that the Annual Statement required by PERAC was not being completed on a timely basis and contained obvious reporting deficiencies. This problem was identified in the prior audit and had not been sufficiently corrected.
Follow-up Result: The system made a concerted effort to complete its filing requirements on a timely basis. They requested an extension in advance of the filing deadline and also requested and received PERAC assistance in completing an accurate and substantially improved Annual Statement. This finding is considered to be resolved.
5. The Audit Report identified certain specific payroll classifications that appeared to qualify as regular compensation for purposes of retirement that were not coded to collect contributions from members.
Follow-up Result: The system promptly resolved this issue through coordination with the town department involved and the payroll officer. This finding is resolved.
6. The Audit Report noted that the system was not regularly and consistently procuring required election forms documenting the notification and counseling of members over age seventy of their option to discontinue active participation in the retirement system.
Follow-up Result: The system promptly identified all active members participating in the retirement plan who qualified for this option. These members were informed of the alternatives available and documentation was obtained. This documentation was inspected in the appropriate files. A report identifying subsequently eligible members was provided and inspected during this review. This finding is considered to be resolved.
7. The Audit Report noted that the system had not adequately carried out its responsibilities to help monitor the limitations imposed on certain retirees receiving disability benefits. Communications and compliance actions were determined to be inadequate.
Follow-up Result: The system made a concerted effort to comply with its reporting and monitoring obligations in this area. Current salary data was inspected to be available for selected retirees. Based on the improved exchange of information with PERAC on this issue, this finding is considered to be resolved.
The Commission wishes to acknowledge the significant effort demonstrated by the staff of the Swampscott 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