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:   09-97-004-12-121

Issue Date:   August 25, 1997

The Employee Retirement Income Security Act of 1974 (ERISA) established a significant number of reporting and disclosure requirements to protect employee benefit plan participants and beneficiaries. The Office of Inspector General (OIG) conducted a performance and compliance audit of the Pension and Welfare Benefits Administration's (PWBA) reporting and disclosure function.

The objectives of our audit were to answer the following questions:

A.  Is PWBA enforcing ERISA reporting and disclosure requirements and the related Federal regulations?

B.  Is the information reported and disclosed by plans used by PWBA and the plan participants?

C. Are there more economical ways to obtain the information, store it, and make it available to the public?

D. Are the reporting and disclosure requirements necessary to achieve the intent of ERISA?
 

Our audit work disclosed that PWBA was generally enforcing ERISA reporting and disclosure requirements; however, PWBA was not enforcing the reporting requirement for Direct Filing Entities (DFEs).  The DFE information submitted was:
 

(1)  not reported in a useful manner,
(2)  not monitored by PWBA for completeness and accuracy, and
(3)  not available for use in PWBA's enforcement program.

(1)  PWBA was not effectively enforcing ERISA requirements for plans to submit SPDs and SMMs to the U.S. Department of Labor (DOL),

(2)  PWBA did not need SPDs or SMMs to be submitted to meet its responsibilities under ERISA, and

(3)  Public and private funds were being wasted by current ERISA requirements for SPDs and SMMs.

Public funds ($500,000 annually) could be put to better use if regulations regarding reporting and disclosure requirements were revised to:

(1) require DFEs that file to use a standard form which can be used with PWBA's ERISA Information System ($290,000) and
(2) eliminate filing requirements for SPDs and SMMs ($210,000).

The reporting and disclosure requirements were generally necessary to achieve the intent of ERISA. However, the requirement to file SPDs and SMMs with PWBA were unnecessary and PWBA needed to continue its efforts to have Congress amend ERISA to repeal this requirement. This supported previous conclusions and recommendations made by PWBA and the National Performance Review (NPR).

PWBA attributed the weaknesses identified to limited available resources. Other areas and projects have been given higher priorities and resources have not been available to improve the DFE reporting process or enforce SPD and SMM filing requirements.

We recommended that the Assistant Secretary for Pension and Welfare Benefits:

(1)  Standardize DFE filing formats using the Form 5500 framework,

(2)  Incorporate DFE filings into the Form 5500 process and the ERISA Information System,

(3)  Develop procedures to identify DFEs not filing annual reports and take appropriate action,

(4)  Determine whether the filing and storage of SPDs and SMMs can be discontinued immediately to reduce costs, and

(5)  Continue efforts to seek legislative change to eliminate the requirements for SPDs and SMMs to be filed with DOL.

The legislative changes needed to discontinue SPD and SMM filings became effective on August 5, 1997 with the passage of the Taxpayer Relief Act of 1997, Public Law 105-32. Our two recommendations regarding SPDs and SMMs are resolved and closed.

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