Overview
In accordance with Section 12 of Chapter 11 of the Massachusetts General Laws, the Office of the State Auditor has conducted a performance audit of certain activities of the Pension Reserves Investment Management Board (PRIM) for the period July 1, 2015 through June 30, 2017.
We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.
Below is a list of our audit objectives, indicating each question we intended our audit to answer and the conclusion we reached regarding each objective.
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Objective |
Conclusion |
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Yes |
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Yes |
To achieve our objectives, we gained an understanding of the internal controls we deemed significant to our audit objectives by reviewing applicable laws, rules, regulations, policies, procedures, and reports, as well as through interviews and observations. We evaluated the design and effectiveness of controls over travel expenses and the procurement of investment management and professional services, and we assessed whether they operated as intended during the audit period.
In addition, we performed the following procedures to obtain sufficient appropriate audit evidence to address our audit objectives.
- We obtained a list of all requests for proposals (RFPs) approved during our audit period from PRIM employees. We identified 9 RFPs for investment management and professional services with a status of Approved to Be Hired. Using a nonstatistical judgmental sampling method, we sampled 5 out of 9 RFPs and reviewed supporting documentation to ensure that the procurement process was conducted in accordance with PRIM’s policies.
- We obtained PRIM’s accounting records for travel expenditures related to its fiduciary duties with regard to investment opportunities (due diligence) and attending staff development opportunities. We randomly selected 25 (totaling $17,293) out of 306 (totaling $222,801) due diligence travel expenses and judgmentally selected 20 (totaling $13,520) out of the 181 (totaling $167,170) staff development travel expenses incurred by PRIM during the audit period. For each sample, we reviewed supporting documentation for the travel expense to ensure that it was related to PRIM’s mission.
To gain an understanding of the general information system controls in place, we conducted testing of certain general information technology controls through the use of questionnaires, interviews, and observations. To determine the reliability of the data from the Peachtree accounting system, we performed data integrity tests, a vouching test on a sample of expenditures from Peachtree to source documentation, and a tracing test from a sample of expenditure source documents to their corresponding entries in Peachtree. In addition, we obtained spreadsheet lists of RFPs for the audit period. We performed a data integrity test on the data. Additionally, we examined the board meeting minutes and determined that each RFP was discussed at a board meeting in our audit period. We also compared vendors listed on the RFP spreadsheet to activity in Peachtree. We determined that the data were sufficiently reliable for the purposes of this report.
When using nonstatistical sampling methods for testing, we did not project the results of our testing to the population.
| Date published: | April 23, 2018 |
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