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CalSTRS audit teams complete 112 employer audits; 175 new findings reported
Summary
CalSTRS audit staff completed 112 employer audits covering roughly 64,000 members, reported 175 new findings and described an audit-resolution backlog partly attributable to new statutory requirements under AB 1667.
CalSTRS audit staff reported to the Audits and Risk Management Committee that they exceeded their fiscal-year goal of 110 employer audits, completing 112 audits that collectively covered about 64,000 members. The employer audits team also reported 175 new audit findings in the 2024–25 audit plan.
Chris Wall, speaking for the employer audits team, said the team had “exceeded the goal by completing 112 audits” and outlined the most prevalent audit findings: improperly reported salary (often additional assignments or retroactive adjustments), and noncreditable compensation including lump-sum payments for PEPRA members, inconsistent treatment of employee groups, and compensation items not approved by employer boards.
CalSTRS reported 149 audit findings resolved in the audit resolution process and 205 findings still in progress; 106 of the in-progress findings are from the current audit plan and 99 are older than one year. Staff acknowledged several findings have remained open longer than one year largely because of the size and complexity of employer reporting and recent changes in law. Bob Yetman, the board's external consultant, explained that AB 1667 has changed employer obligations and that the expanded scope of required member identification has contributed to older findings remaining open while employers produce the mandated impacted-member lists.
Internal audit staff reported completing nearly all of their fiscal-year plan, with two contracted investment audits still pending report in November. Marlene Noss (internal audit) said internal audit produced 25 new audit findings for the year, with governance-related findings chiefly focused on opportunities to enhance policies and processes. As of June 30, 2025, internal audit reported 11 unresolved findings older than one year; staff said delays often reflected business-area implementation of new systems or processes rather than lack of follow-up.
Committee members asked about preparedness for the Pension Solution/BenefitConnect implementation. Audit staff said the change will not immediately affect current audits because they audit already-reported payroll data, but they have started a data solutions effort and training so audit procedures can be updated once live BenefitConnect data arrive. Staff said they will adapt audit procedures and training as needed and may alter future audit plans to respond to system changes.
Staff noted performance measures for satisfaction surveys differ between the employer audits team (which has a larger sample) and internal audit; employer-audit satisfaction was reported at about 85% while internal audit satisfaction was reported at about 73% (measures reflect the percentage of respondents who agreed or strongly agreed on survey items). Committee members praised the audit teams’ productivity and pressed for tracking and resolution of older findings.
The update was informational; no committee action was taken on the audit findings report.
