Tag: audit

Post Office scandal explained: What the Horizon saga is all about

Mary Pat Campbell

Link: https://www.bbc.com/news/business-56718036

Excerpt:

The Post Office had prosecution powers and, between 1999 and 2015, it prosecuted 700 sub-postmasters and sub-postmistresses – an average of one a week – based on information from a computer accounting system called Horizon. Another 283 cases were brought by other bodies including the Crown Prosecution Service.

Some went to prison for false accounting and theft. Many were financially ruined, even though they had repeatedly highlighted problems with the software.

After 20 years, campaigners won a legal battle to have their cases reconsidered. To date only 93 convictions have been overturned. Under government plans, victims will be able to sign a form to say they are innocent, in order to have their convictions overturned and claim compensation.

….

Horizon was introduced by the Post Office in 1999. The system was developed by the Japanese company Fujitsu, for tasks like accounting and stocktaking.

Sub-postmasters complained about bugs in the system after it falsely reported shortfalls – often for many thousands of pounds.

Some attempted to plug the gap with their own money, as their contracts stated that they were responsible for any shortfalls. Many faced bankruptcy or lost their livelihoods as a result.

The Horizon system is still used by the Post Office, which describes the latest version as “robust”.

….

Nobody has ever been held accountable for the scandal.

The heavily criticised former Post Office chief executive, Paula Vennells, said she would hand back her CBE after a petition calling for its removal gathered more than a million signatures.

Lib Dem leader Sir Ed Davey is among several politicians who have faced questions, as he was postal affairs minister in the coalition government. He said he regretted not asking “tougher questions” of Post Office managers, describing what had happened as “dreadful”.

The inquiry is hearing from Post Office investigators, Fujitsu, civil servants and others.

Author(s): By Kevin Peachey, Michael Race & Vishala Sri-Pathma

Publication Date: 11 Jan 2024

Publication Site: BBC News

DOL Inspector General Says EBSA Lacks Resources to Audit Pensions

Mary Pat Campbell

Link: https://burypensions.wordpress.com/2023/12/06/dol-inspector-general-says-ebsa-lacks-resources-to-audit-pensions/

Excerpt:

planadvisor.com reports:

Department of Labor Inspector General Larry Turner issued a semi-annual report Tuesday arguing that the Employee Benefit Security Administration lacks both the resources and authority to fulfill its mandate to employee benefit plans. The report particularly emphasized EBSA’s limited authority to conduct thorough audits of workplace retirement plans.

My takeaways from the report:

The OIG remains concerned about the Employee Benefits Security Administration’s (EBSA) ability to protect the integrity of pension, health, and other benefit plans of about 153 million workers, retirees, and their families under the Employee Retirement Income Security Act of 1974 (ERISA). In particular, the OIG is concerned about the statutory limitations on EBSA’s oversight authority and inadequate resources to conduct compliance and enforcement. A decades-long challenge to EBSA’s compliance program, ERISA provisions allow billions of dollars in pension assets to escape full audit scrutiny. The act generally requires every employee benefit plan with more than 100 participants to obtain an audit of the plan’s financial statements each year. However, an exemption in the law allowed auditors to perform “limited-scope audits.” These audits excluded pension plan assets already certified by certain banks or insurance carriers and provided little to no confirmation regarding the actual existence or value of the assets. (page 23)

Author(s): John Bury

Publication Date: 6 Dec 2023

Publication Site: burypensions

Opinion  How much did Congress lose by defunding the IRS? Way more than we thought.

Mary Pat Campbell

Link: https://www.washingtonpost.com/opinions/interactive/2023/irs-enforcement-costs-congress-funding/

Graphic:

Excerpt:

The White House and Congress recently agreed to claw back more than $20 billion earmarked for the Internal Revenue Service. This deal was, ostensibly, part of a grand bargain to reduce budget deficits.

Unfortunately, it’s likely tohave the opposite effect. Every dollar available for auditing taxpayers generates many times that amount for government coffers — and the rate of return is especially astonishing for audits of the wealthiest Americans, according to new research shared exclusively with The Post.

A team of researchers at Harvard University, the University of Sydney and the Treasury Department examined internal IRS data for approximately 710,000 in-person audits from 2010 to 2014. Here’s what they found:

Wealthy people generally have more complex tax returns, so auditing them costs more. Internal government records show that the IRS employees auditing the rich earn higher wages and spend much more time per audit; overhead costs add up, too.

Now here’s the revenue collected per audit, from additional taxes, penalties and interest. The differential for low- vs. high-income taxpayers is even bigger.

This means that while the upfront costs of auditing the wealthy are usually higher — perhaps suggesting these taxpayers aren’t worth going after — the average return on investment is much better.

Author(s):

Opinion by Catherine Rampell and graphics by
Youyou Zhou

Publication Date: 14 Jun 2023

Publication Site: Washington Post

Editorial Board: NY Thruway’s proposed toll increase is undercut by a disturbing audit

Mary Pat Campbell

Link: https://buffalonews.com/opinion/editorial/editorial-board-ny-thruways-proposed-toll-increase-is-undercut-by-a-disturbing-audit/article_56de1d8a-0173-11ee-885e-1bcdef5c79d9.html?utm_content=20230610&utm_medium=email&utm_source=weekly+news

Excerpt:

According to an audit released May 26 by State Comptroller Tom DiNapoli’s office, the Thruway Authority, which completed a transition to a cashless tolling system in 2020, has “struggled to collect hundreds of millions of dollars in unpaid fees.” The total of uncollected fees is hefty by any standard. As of March, it was $276.3 million in unpaid funds in collection status, with out-of-state drivers accounting for $119 million, or 43% of this amount.

The timing isn’t great for this news. In December, the Thruway Authority proposed that 2024 rates increase by 5% for E-ZPass holders statewide, with a second increase in 2027 of another 5%.

DiNapoli’s audit recommends ways the Thruway Authority could better identify, bill and collect tolls and related fees. The authority agreed with three of the audit’s 11 recommendations, and did not comment on whether it agreed or disagreed with eight others.

….

According to the audit, the clue as to where the leakage might be found is in the collection process. The audit “found a lapse in the authority’s recouping of unpaid tolls” after the expiration of a contract with the authority’s collections vendor in September 2020. The authority signed a contract with a new vendor in January 2021 but did not send the new vendor any of the remaining unpaid accounts until July 2021, nine months after the prior contract’s expiration.

….

More than 90% of Thruway revenue comes from tolls and related fees, with the vast majority coming from EZ-Pass users and the rest from toll-by-mail payments. As the audit noted, the Thruway Authority collected $804 million in tolls and related revenues in 2021.

Author(s): Editorial Board

Publication Date: 5 Jun 2023

Publication Site: The Buffalo News

How Medicare Advantage Plans Dodged Auditors and Overcharged Taxpayers by Millions

Mary Pat Campbell

Link: https://khn.org/news/article/medicare-advantage-auditors-overcharged-taxpayers/

Excerpt:

A review of 90 government audits, released exclusively to KHN in response to a Freedom of Information Act lawsuit, reveals that health insurers that issue Medicare Advantage plans have repeatedly tried to sidestep regulations requiring them to document medical conditions the government paid them to treat.

The audits, the most recent ones the agency has completed, sought to validate payments to Medicare Advantage health plans for 2011 through 2013.

As KHN reported late last month, auditors uncovered millions of dollars in improper payments — citing overcharges of more than $1,000 per patient a year on average — by nearly two dozen health plans.

Author(s): Fred Schulte and Holly K. Hacker

Publication Date: 13 Dec 2022

Publication Site: Kaiser Health News

Ohio’s Out-of-the-Box Pension

Mary Pat Campbell

Link: https://www.toledoblade.com/opinion/editorials/2022/09/18/editorial-ohio-out-of-the-box-public-pension/stories/20220914044

Excerpt:

Alarm bells should be ringing about the Ohio Police & Fire Pension following the release of a fiduciary audit of the fund, finished six years after the legal deadline.

Ignoring the law falls on the Ohio Retirement Study Council and their creator, the Ohio General Assembly. But the warnings on investment risk within the OP&F portfolio demand immediate, widespread attention.

The combined pension contribution for police is 31.75 percent of their salary and with firefighters the employer-employee combination is 36.25 percent.

…..

Ohio Police & Fire is “clearly thinking outside the box,” according to Funston Advisory Services. “OP&F is among a very small number of major institutional investors to have adopted a risk parity investment approach across the plan’s entire investment structure,” Funston tells us. Ohio’s police and fire pension is also a pioneer in an investment strategy called “portable alpha.”

In each case, the characteristic that separates OP&F from the rest of the public pension pack is “meaningful use of portfolio leverage.” The Ohio safety forces pension is using one of the riskiest investment strategies in America. The 25 percent of leverage showing on the balance sheet is actually much higher because the alternative investments also include leverage.

The entire portfolio is managed by outside managers, 135 fund managers by our count, who pulled down “mind boggling” fees according to pension expert Richard Ennis. If Mr. Ennis’ name sounds familiar you probably remember he was the expert Ohio turned to for comprehensive analysis of the Coingate scandal at the Ohio Bureau of Workers Compensation. Mr. Ennis gave us an assessment of the OP&F performance over the last 10 years that indicates the pension matched the results of an index fund despite the high fees.

Author(s): The Blade Editorial Board

Publication Date: 18 Sept 2022

Publication Site: The Toledo Blade

Democrats’ $80 billion wager: A bigger IRS will be a better IRS

Mary Pat Campbell

Link: https://www.washingtonpost.com/business/2022/08/06/inflation-reduction-act-irs/

Graphic:

Excerpt:

The result is that the IRS’s prolific enforcement capabilities — which bring in on average better than $10 in revenue for every $1 spent pursuing audits — are often trained on the most economically vulnerable taxpayers.

More than half of the agency’s audits in 2021 were directed at taxpayers with incomes less than $75,000, according to IRS data. More than 4 in 10 of its audits targeted recipients of the earned income tax credit, one of the country’s main anti-poverty measures.

Congress and the White House, when led by Republicans, have starved the IRS of resources for so long, experts say, that even with an influx of $80 billion in new funding, the agency’s ability to transform itself is far from assured.

Some of its main computers still run on programming language that dates to the 1960s, called COBOL, the IRS has repeatedly told policymakers. The program is so old that college computer science courses rarely teach it anymore, forcing the IRS to spend heavily on training new hires in antiquated systems.

The IRS has 60 discrete case management systems that do not communicate with one another.

Its staffing levels have dropped by 17 percent since 2010, including a 30 percent decline in enforcement employees, because its budget has flatlined: Adjusted for inflation, its annual appropriation from Congress is down 12 percent over the same span, at $12.6 billion this year.

Author(s): Jacob Bogage

Publication Date: 6 Aug 2022

Publication Site: Washington Post

Big Four Accounting Firms Come Under Regulator’s Scrutiny

Mary Pat Campbell

Link: https://www.wsj.com/articles/big-four-accounting-firms-come-under-regulators-scrutiny-11647364574?st=e3o5412th5mqg7m&reflink=desktopwebshare_linkedin

Graphic:

Excerpt:

Regulators are carrying out a sweeping investigation of conflicts of interest at the nation’s largest accounting firms, asking whether consulting and other nonaudit services they sell undermine their ability to conduct independent reviews of public companies’ financials, according to people familiar with the matter.

The Securities and Exchange Commission probe highlights the agency’s new focus on financial-market gatekeepers such as accountants, bankers and lawyers. These firms help companies raise capital and communicate with shareholders, but also have duties under federal investor-protection laws. Auditors are a shareholder’s first line of defense against sloppy or dodgy accounting.

….

The Big Four audit 66% of all public companies with a market capitalization over $75 million, according to Audit Analytics. All four have paid fines to the SEC since 2014 to settle prior regulatory investigations of audit independence violations.

Author(s): Dave Michaels

Publication Date: 15 Mar 2022

Publication Site: WSJ

Ohio Teachers Pension Faces Special Audit Over Scathing Report

Mary Pat Campbell

Link:https://www.ai-cio.com/news/ohio-teachers-pension-faces-special-audit-over-scathing-report/

Excerpt:

The $95 billion Ohio State Teachers Retirement System (STRS) is facing a special state audit over a report that accuses the pension fund of secretly collaborating with Wall Street firms, lacking transparency, and wasting billions of dollars.

In June, Benchmark Financial Services released preliminary findings of a forensic investigation of Ohio STRS titled “The High Cost of Secrecy.” The report ripped into the retirement system, saying it “has long abandoned transparency, choosing instead to collaborate with Wall Street firms to eviscerate Ohio public records laws and avoid accountability.”

The Ohio Auditor of State’s Office recently sent a letter to Ohio STRS Executive Director William Neville saying it has received “numerous complaints” regarding the report and that it had conducted a preliminary examination into the matter.

Author(s): Michael Katz

Publication Date: 25 Oct 2021

Publication Site: ai-CIO

Members of teacher pension fund planning lawsuit to force transparency

Mary Pat Campbell

Link: https://news.yahoo.com/members-teacher-pension-fund-planning-110300430.html?guccounter=1

Excerpt:

About 1,000 current and retired Ohio educators skeptical of the true financial shape of their $90 billion state pension fund are preparing to sue to force greater cooperation with a $75,000 self-funded investigation of its books.

The forensics audit, financed through money raised from members, is being undertaken by pension investment expert Ted Siedle — a former Securities Exchange Commission attorney, financial forensics investigator, and co-author of the book “Who Stole My Pension?”

The public records lawsuit will ask the Ohio Supreme Court to force the State Teachers Retirement System, serving some 500,000 active, inactive, and retired members, to release information that investment firms have claimed is proprietary or a trade secret.

Author(s): Jim Provance, The Blade, Toledo, Ohio

Publication Date: 3 May 2021

Publication Site: Yahoo News