|
Reading Room
|
OIG Reports
Evaluation of Service Credit Computations
Creditable service is a key component of the pension benefit calculation for Board employees. Creditable service includes current Board employment as well as prior service with the Federal Reserve System, the federal government, or the military. We performed an evaluation of service credit computations, with the several objectives: verify the accuracy of recent service credit adjustments made by Management Division (MGT) staff, evaluate controls over the process of computing employees’ creditable service, and evaluate the accuracy of service credit information in systems maintained by the Board and the outsourcing contractor.
Our recalculations showed that MGT staff accurately calculated the service credit adjustments for the employees in our sample. Management has also taken steps to strengthen the service credit process by training current staff and hiring additional knowledgeable staff to perform service credit calculations, implementing a supervisory review process, and developing an employee notification letter to inform employees of the types of prior service that are creditable and the steps they must take to receive credit. However, the process is manually-intensive and includes multiple data transcriptions which increases the risk of data errors. In addition, the process lacks several key controls; as a result, significant data discrepancies exist between the Board’s information system and the system maintained by the outsourcing contractor. During our evaluation, we also identified other opportunities to strengthen existing controls and presented our evaluation results to the Deputy Director of MGT. Our briefing contained three recommendations designed to strengthen or enhance controls over the service credit process. The Deputy Director of MGT concurred with our recommendations and identified several actions that have been taken or are planned to address the recommendations. We will follow up on actions taken as part of future audit and evaluation work.
|
