MICHIGAN LEGISLATIVE RETIREMENT SYSTEM

Michigan Office of the
Auditor General
Thomas H. McTavish, C.P.A.
Auditor General

EXECUTIVE DIGEST #0314001
MICHIGAN LEGISLATIVE RETIREMENT SYSTEM

INTRODUCTION
This report contains the results of our financial audit of the Michigan Legislative Retirement System (MLRS) for the period October 1, 1998 through September 30, 2000.

AUDIT PURPOSE
This financial audit was conducted as part of the constitutional responsibility of the Office of the Auditor General. Financial audits are conducted at various intervals to provide for enhanced financial reporting of significant State programs and/or activities and to complement the annual audit of the State's financial statements. This audit is required on a biennial basis by Section 38.1041 of the Michigan Compiled Laws.

BACKGROUND
MLRS's mission is to administer and maintain the retirement system for eligible members of the Legislature and to provide retirement allowances and other benefits, such as life, health, and dental insurance, to retirees, deferred vested members, and beneficiaries.

MLRS was created by Act 261, P.A. 1957 (Sections 38.1001 - 38.1080 of the Michigan Compiled Laws). An 11-member Board of Trustees administers MLRS.

Act 486, P.A. 1996, amended the MLRS enabling statute to mandate that persons elected to the Michigan Legislature after March 31, 1997 participate in a Statewide defined contribution pension plan. Thus, the MLRS defined benefit plan is a closed plan.

MLRS is funded by State appropriations, member contributions, circuit and district court fees (as provided by Sections 600.2529 and 600.8381 of the Michigan Compiled Laws), and income from investments.

There were 234 and 231 persons (retirees and beneficiaries) receiving retirement benefits as of September 30, 2000 and September 30, 1999, respectively. Retirement benefits paid for the fiscal years ended September 30, 2000 and September 30, 1999 were $5,686,769 and $5,325,091, respectively.

AUDIT OBJECTIVES AND CONCLUSIONS
Audit Objective: To assess and report on MLRS's compliance with certain provisions of laws, regulations, contracts, and grants, noncompliance with which could have a direct and material effect on the financial statements, and on its internal control over financial reporting, based on our audit of the financial statements.

Conclusion: Our assessment of compliance did not disclose any instances of noncompliance that could have a direct and material effect on the financial statements. Also, our assessment of internal control over financial reporting did not disclose any material weaknesses.

Audit Objective: To audit MLRS's financial statements as of and for the fiscal years ended September 30, 2000 and September 30, 1999.

Conclusion: We expressed an unqualified opinion on MLRS's financial statements.

AUDIT SCOPE
Our audit scope was to examine the financial and other records of the Michigan Legislative Retirement System for the period October 1, 1998 through September 30, 2000. Our audit was conducted in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States and, accordingly, included such tests of the records and such other auditing procedures as we considered necessary in the circumstances.

PRIOR AUDIT FOLLOW-UP
MLRS complied with both prior audit recommendations.

Full Audit Report - #0314001 - MICHIGAN LEGISLATIVE RETIREMENT SYSTEM

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INTRODUCTION This report contains the results of our financial audit of the Michigan Legislative Retirement System (MLRS) for the period October 1, 1998 through September 30, 2000.

AUDIT PURPOSE This financial audit was conducted as part of the constitutional responsibility of the Office of the Auditor General. Financial audits are conducted at various intervals to provide for enhanced financial reporting of significant State programs and/or activities and to complement the annual audit of the State's financial statements. This audit is required on a biennial basis by Section 38.1041 of the Michigan Compiled Laws.

BACKGROUND MLRS's mission is to administer and maintain the retirement system for eligible members of the Legislature and to provide retirement allowances and other benefits, such as life, health, and dental insurance, to retirees, deferred vested members, and beneficiaries. MLRS was created by Act 261, P.A. 1957 (Sections 38.1001 - 38.1080 of the Michigan Compiled Laws). An 11-member Board of Trustees administers MLRS. Act 486, P.A. 1996, amended the MLRS enabling statute to mandate that persons elected to the Michigan Legislature after March 31, 1997 participate in a Statewide defined contribution pension plan. Thus, the MLRS defined benefit plan is a closed plan. MLRS is funded by State appropriations, member contributions, circuit and district court fees (as provided by Sections 600.2529 and 600.8381 of the Michigan Compiled Laws), and income from investments. There were 234 and 231 persons (retirees and beneficiaries) receiving retirement benefits as of September 30, 2000 and September 30, 1999, respectively. Retirement benefits paid for the fiscal years ended September 30, 2000 and September 30, 1999 were $5,686,769 and $5,325,091, respectively.

AUDIT OBJECTIVES AND CONCLUSIONS Audit Objective: To assess and report on MLRS's compliance with certain provisions of laws, regulations, contracts, and grants, noncompliance with which could have a direct and material effect on the financial statements, and on its internal control over financial reporting, based on our audit of the financial statements. Conclusion: Our assessment of compliance did not disclose any instances of noncompliance that could have a direct and material effect on the financial statements. Also, our assessment of internal control over financial reporting did not disclose any material weaknesses. Audit Objective: To audit MLRS's financial statements as of and for the fiscal years ended September 30, 2000 and September 30, 1999. Conclusion: We expressed an unqualified opinion on MLRS's financial statements.

AUDIT SCOPE Our audit scope was to examine the financial and other records of the Michigan Legislative Retirement System for the period October 1, 1998 through September 30, 2000. Our audit was conducted in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States and, accordingly, included such tests of the records and such other auditing procedures as we considered necessary in the circumstances.

PRIOR AUDIT FOLLOW-UP MLRS complied with both prior audit recommendations.