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CalPERS Risk & Audit committee approves revised Office of Audit Services charter and issues RFP for independent parallel actuarial valuations
Summary
The Risk & Audit Committee approved an updated Office of Audit Services (OFAS) charter to align with Institute of Internal Auditors global standards and authorized a request for proposal for independent parallel actuarial valuations and certification services covering multiple actuarial reports.
The Risk & Audit Committee of the California Public Employees Retirement System on March 17 approved a revised charter for the Office of Audit Services (OFAS) to conform with the Institute of Internal Auditors global internal audit standards and authorized staff to issue a request for proposals (RFP) for independent actuarial parallel valuation and certification services.
Belize Chapuis, chief of OFAS, described the charter updates as adoption of the IIA public-sector charter template and said the revisions clarify OFAS’s functional reporting relationship to the committee, the chief auditor’s responsibilities (including reporting audit plans, potential impairments to independence, and quality assurance requirements), and new requirements for external assessment teams and periodic charter review.
Chapuis said OFAS will present the charter for reconsideration and approval at least once every two years and that the charter memorializes existing practices and adds required detail on qualifications for external assessment teams. Board members asked why OFAS follows IIA global standards rather than U.S. Government Accountability Office (GAO) Government Auditing Standards (the “Yellow Book”); Chapuis and management replied that CalPERS has historically followed the IIA standards under the options available in state law and that OFAS functionally reports to the Risk & Audit Committee while administratively reporting to the CEO.
On a separate action, the committee approved the issuance of an RFP to engage a qualified actuarial firm to perform third-party parallel valuation and certification services for a multi-year period (proposed three-year active review with a fourth-year summary and update). Randy Zubek of the CalPERS actuarial team said the parallel-valuation process is an established practice for CalPERS and provides an independent replication of actuarial results for reports covering state and schools, public agencies and certain statutory systems.
Zubek explained that finalists would be evaluated on technical merit and fees, with committee members participating in finalist interviews; he described the contract term as roughly three to four years. Following committee discussion, the motion to authorize the RFP passed unanimously.
The committee also received information updates on enterprise compliance risk and governance activities, OFAS strategic planning and recruiting efforts. Committee members asked about OFAS’s ability to access health-plan contractor claims information; Chapuis said audit work can include contract compliance reviews and that access will be exercised consistent with applicable federal and state privacy laws.
Actions recorded included approval of the OFAS charter revision and approval to release the actuarial parallel valuation RFP; both motions passed by majority roll call votes without recorded dissents.
