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Meeting of the Board of Directors of the Pension Benefit Guaranty Corporation November 12, 2015

Designated Representatives of the Board Members
              Phyllis C. Borzi, Assistant Secretary of Labor, Employee Benefits Security Administration
              (Designated Representative of Secretary of Labor Thomas E. Perez)
              Amias Gerety, Acting Assistant Secretary of the Treasury for Financial Institutions
              (Designated Representative of Secretary of the Treasury Jacob J. Lew)

              W. Thomas Reeder, Director
              Ann Orr, Chief of Staff
              Judith R. Starr, General Counsel and Secretary to the Board
              Patricia Kelly, Chief Financial Officer
              Alice Maroni, Chief Management Officer
              Michael Rae, Deputy Chief Policy Officer
              Theodore Winter, Director, Financial Operations Department
              Walter Luiza, Deputy Director, Financial Operations Department
              Bruce Johnson, Financial Operations Department
              Anthony Castoro, Accountant, Financial Operations Department
              Ray Bryant, Financial Operations Department
              Carlisle Schrouter, Financial Operations Department
              Stephen Leslie, Financial Operations Department
              Martin Boehm, Director, Contract, Controls Review Department
              Scott Young, Chief Actuary, Benefits Administration and Payment Department
              Martha Threatt, Deputy Director, Communications, Outreach and Legislative Affairs
              Judith Larsen, Office of the Director

PBGC's Office of Inspector General
              Robert Westbrooks, Inspector General
              Deborah Stover-Springer, Counsel to the Inspector General
              Joseph Marchowksy, Audit Manager

Other Board Agency Staff
              Hilary Duke, Division Chief, Office of Policy and Research, Employee Benefits Security
              Administration, Department of Labor
              Rick Lattimer, Policy Analyst, Economics and Statistics Administration, Department of Commerce
              Patricia Kao, Director, Office of Financial Institutions Policy, Department of the Treasury
              Philip Quinn, Senior Policy Analyst, Department of the Treasury

CliftonLarsonAllen (outside audit firm)
              Patrick Byer, Engagement Principal Marlon Perry, Principal
              Marlon Perry, Principal

The Board, through its representatives duly designated pursuant to section 4002.3(b)(1) of the Corporation's Bylaws, met on November 12, 2015.   The Acting Chair, Assistant Secretary of Labor Phyllis C. Borzi, called the meeting to order at 1:30 p.m.

The Acting Chair thanked PBGC management and staff for their hard work throughout the financial audit, and also thanked the Office of the Inspector General (OIG) and independent auditor staff.  She explained that the purpose of the meeting was to review and approve transmittal of the Corporation's fiscal year 2015 financial statements, annual performance report, independent auditor's report, and other documentation in conformance with OMB Circular A-11, to the President, the Congress, and the Director of the Office of Management and Budget by November 16, as November 15 falls on a Sunday.  Additionally, the report is supplemented by the Chair's message and the Director's message.  She stated that the Board would approve the PBGC fiscal year 2015 Annual Report required by section 4008 of ERISA once the actuarial analysis required by that section is completed.  The Acting Chair noted that, on approval, the report comprising these documents will not be immediately released but will be subject to technical corrections agreed to among the Board Representatives, and receipt of the independent auditor's report.  The minutes of this meeting will be circulated to the Board Members with their approval thereof constituting ratification of the acts of the Board Representatives.

      PBGC Director W. Thomas Reeder echoed the Acting Chair's thanks.

      The Acting Chair then recognized Inspector General Robert Westbrooks.

Inspector General Westbrooks commended the collaborative process that characterized this year's audit. He noted that, because of a premium income adjustment identified by management after the draft independent auditor's report had been provided, revisions were required to the report and it is not yet available.  The OIG staff, the auditors and PBGC program staff have been working hard to resolve the impact of the issue and new language has been drafted that is undergoing OIG quality review.  The Inspector General then introduced CliftonLarsonAllen principal Patrick Byer.

Mr. Byer presented the highlights of the independent auditor's report.  The auditors are issuing an unmodified opinion -- PBGC's 23rd.  In addition, the two information technology material weaknesses have been downgraded to significant deficiencies, which Mr. Byer characterized as a great accomplishment.   However, the auditors are again issuing an adverse opinion on internal controls. The audit team is moving quickly to finalize the audit report to properly classify the premium adjustment issue.  Overall, however, Mr. Byer stressed that this was a very cooperative audit that ran more smoothly than many other years.  Mr. Byer further noted that the accomplishments of the year should not be tarnished by one little thing.

The Acting Chair expressed her thanks and asked whether the audit report explains how an unmodified opinion can coexist with an adverse opinion on internal controls.   Mr. Byer assured her that the description and presentation of the issues in the report make this clear.  The Acting Chair then requested a motion to approve, absent any material changes, transmittal of the Corporation's fiscal year 2015 financial statements, annual performance report, independent auditor's report, and other documentation in conformance with OMB Circular A-11, supplemented by the Chair's message and the Director's message, to the President, the Congress, and the Office of Management and Budget by November 16.  The motion was made, and upon being seconded, passed.

The meeting adjourned at 1:45 p.m.

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