You are here

Minutes of the Board of Directors' Meeting of the Pension Benefit Guaranty Corporation Help November 13, 2013

Minutes of the Board of Directors' Meeting of the Pension Benefit Guaranty Corporation Help November 13, 2013

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)
Mary J. Miller, Assistant Secretary of the Treasury for FiDesignated 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)
Mary J. Miller, Assistant Secretary of the Treasury for Financial Markets
(Designated Representative of Secretary of the Treasury Jacob J. Lew)
Mark Doms, Under Secretary for Economic Affairs (by telephone)
(Designated Representative of Secretary of Commerce Penny Pritzker)

PBGC
Joshua Gotbaum, Director
Ann Orr, Chief of Staff
Judith R. Starr, General Counsel and Secretary to the Board
Patricia Kelly, Chief Financial Officer
Sanford Rich, Chief, Negotiations and Restructuring
Theodore Winter, Director, Financial Operations Department
Walter Luiza, Deputy Director, Financial Operations Department
Bruce Johnson, Financial Operations Department
Mark Calisti, Corporate Investment Department
Scott Young, Chief Actuary, Benefits Administration and Payment Department
Wilmer Graham, Quality Management Department
Nick Novak, Contracts and Controls Review Department
Michael Rucki, Communications and Public Affairs Department

PBGC's Office of Inspector General
Deborah Stover-Springer, Acting Inspector General
Rashmi Bartlett, Assistant Inspector General for Audit
Joseph Marchowksy, Audit Manager

Other Board Agency Staff
Nicole Swift, Employee Benefits Law Specialist, Office of Policy and Research, Employee Benefits Security Administration, Department of Labor
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, Department of the Treasury

CliftonLarsonAllen (outside audit firm)
Patrick Byer, Partner
Marlon Perry, Senior Manager
David Harris, IT Senior Manager

 

 The Board, through its representatives duly designated pursuant to section 4002.3(b)(1) of the Corporation's Bylaws, met on November 13, 2013. The Acting Chair, Assistant Secretary of Labor Phyllis C. Borzi, called the meeting to order at 11:08 a.m.

 The Acting Chair thanked PBGC management and staff for all their hard work throughout the financial audit. She explained that the purpose of the meeting was to review and approve transmittal of the Corporation's fiscal year 2013 financial statements, annual performance report, independent auditors 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. 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 2013 Annual Report required by section 4008 of ERISA once the actuarial analysis required by that section is completed. She 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. 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.

 Director Josh Gotbaum echoed the Acting Chair's remarks, noting that as a financial institution that provides retirement security, trust is integral to PBGC's mission and the integrity of the financial statements is integral to preserving that trust. He commended PBGC's 21th year of issuing financial statements with an unqualified opinion.

 Acting Inspector General Deborah Stover-Springer then introduced CliftonLarsonAllen partner Patrick Byer.

 Mr. Byer presented the highlights of the independent auditor's report, noting several changes of terminology and format, such as the use of the term “unmodified” to describe a clean opinion. The auditors are anticipating the issuance of an unmodified opinion on the financial statements. They also anticipate issuing an adverse opinion on internal controls, based on the same three material weaknesses and one significant deficiency as last year. Mr. Byer described the material weaknesses resulting in the adverse opinion as entity-wide security program, access control/configuration management, and benefit administration. Lack of integration of financial systems is being reported as a significant deficiency. He also noted that PBGC has made progress since last year in addressing issues associated with the material weaknesses and significant deficiency but corrective actions have not been fully implemented to warrant removal.

 The Acting Chair asked whether in the future there could be a fuller explanation of how an unmodified opinion on the financial statements can coexist with an adverse opinion on internal controls. After a discussion of the issue, the Acting Inspector General offered to craft language for the Inspector General's transmission letter to address this next year, which was agreed to by the discussants.

 Board Representative Miller asked about the pace of closure and what could be expected to close next year. Ms. Kelly stated her belief that the significant deficiency related to financial system integration would be closed next year, but that the benefits payment and information technology issues would take longer.

 Board Representative Miller asked that the chart on the deficit make it clear in the heading that the deficit is a financial deficit and not an operating deficit, and the change was agreed to as a technical correction that could be made after the meeting.  At her request, Ms. Kelly also agreed to set up a longer briefing for the Board Representatives after the financial statements are issued.

 The Acting Chair thanked PBGC management, the Office of Inspector General and CliftonLarsonAllen for all their hard work. She then requested a motion to approve, absent any material changes, transmittal of the Corporation's fiscal year 2013 financial statements, annual performance report, independent auditors 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 15. The motion was made, and upon being seconded, passed.

 The meeting adjourned at 11:38 a.m.

Last updated April 27, 2017