Comptroller: adverse opinion on CFSE internal controls (CP-15-10)

On May 27, 2015, the Office of the Comptroller published Audit Report CP-15-10 on the State Insurance Fund Corporation (Unit 3165). It is the second report from that audit (period Jan 1, 2010–Jun 30, 2014) and examines internal and administrative controls. Adverse opinion: the fiscal operations covered, as to those controls, were not carried out in accordance with applicable law and regulation.

Finding 1: the Governing Board was not constituted with the members Law 16-2013 requires (7 members with ex officio / physician / attorney / career or private / employer-via-DACO profiles). Finding 2: absence of norms and of a Risk Assessment report in the internal-control structure. Finding 3: absence of an operating Technical Compensation Board for specialized program cases. Finding 4: lack of annual physical property inventories and of a Substitute Property Custodian; books recorded movable property of $7,705,865 in FY2012-13 (medical, office and technology equipment).

Per financial statements cited in the report, in FY2010-11 to 2012-13 CFSE generated operating revenues of $1,888,081,248 and expenses of $1,987,113,644 (operating deficit $99,032,396). It transferred $170,323,296 to the Industrial, Labor and Family Commission. Net assets at Jun 30, 2013: $337,100,972 (down $41.3 million vs Jul 1, 2010).

CFSE operates under Act No. 45 (employer workers’ compensation) with a Central Office, Industrial Hospital, nine regional offices and several dispensaries. Resources come mainly from employer premiums. The draft findings were discussed with the Administrator and Board President before the final version. An audit finding is not a formal charge or conviction in this note. Topic politics after mapping corruption. An operating deficit is not theft. Primary: OpenDoc CP-15-10. Cousin: none.