Audit Report

This report reflects the findings of the Office of Inspector General at the time that the audit report was issued. More current information may be available as a result of the resolution of this audit by the Department of Labor program agency and the auditee. For further information concerning the resolution of this report's findings, please contact the program agency.

Report Number:   09-98-002-12-121

Issue Date:  March 27, 1998
 
We conducted an audit of the Pension and Welfare Benefits Administration's (PWBA) enforcement strategy. Our objective was to determine whether the program's current enforcement strategy was appropriate, given the characteristics of the regulated universe and the results of enforcement.

Overall, we concluded that PWBA's enforcement strategy is appropriate and has disclosed significant ERISA violations and large monetary results. PWBA's enforcement program relies on a highly knowledgeable staff, committed to ensuring that participants and beneficiaries receive promised benefits. Since 1986, PWBA has developed and refined its enforcement strategy, empowering the Regional Offices, especially in case selection. PWBA has also improved technical assistance efforts to follow up on participant and beneficiary complaints. Finally, PWBA's recent refinements to its enforcement strategy coupled with additional investigative staff, have increased monetary results from $231 million in fiscal year (FY) 1995 to $465 million during the first three quarters of FY 1997.

We also concluded, however, that PWBA could improve enforcement efforts by reallocating investigative resources to the more effective proactive case selection techniques. PWBA's enforcement program does not fully utilize targeting techniques' results to direct resources to plans with greater potential for ERISA violations. This lack of responsiveness is due primarily to: (1) incomplete analysis of program results achieved from resource investments; (2) program goals that are not based on program results linked to resource investments; and (3) Internal Revenue Service (IRS) temporary refusal of access to their Centers. As a result, PWBA commits disproportionately high resource expenditures to cases less likely to have ERISA violations and low resource expenditures to cases with greater potential for ERISA violations. Enforcement data demonstrates PWBA allocated one percent of the investigative resources expended in the first three quarters of FY 1997 to the targeting method responsible for 43 percent of the monetary results from cases opened in FY 1995 and FY 1996.

We recommended that the Assistant Secretary for Pension and Welfare Benefits strengthen the agency enforcement program by:

• developing and implementing a periodic analysis of proactive targeting results;

 
• using this analysis to deploy investigative resources to those proactive targeting methods that demonstrate the highest return on investment; and

 
• working with the IRS to resolve the denial of access to the Annual Reports Form 5500 at their Centers.

 

PWBA agreed with the finding and recommendations and stated that increased analysis would be part of a proposed reorganization being developed. PWBA also stated that the National Office would instruct Regional Directors to pay more attention to this type of analysis. PWBA has resolved the issues raised by the IRS in denying PWBA access to their Centers and again has access to the Forms 5500.

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