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External auditor Crowe outlines 2025 fiscal audit approach, says Benefit Connect not yet financially significant
Summary
Crowe LLP presented its client service plan to CalSTRS’ audit committee, described audit scope and timeline, and said the Pension Solution (Benefit Connect) is not financially significant for the 2025 audit but is expected to be for 2026.
Crowe LLP, CalSTRS’ independent external auditor for the fiscal‑year audit, presented its client service plan to the Audits and Risk Management Committee, outlining audit scope, staffing, significant audit areas and a year‑round timeline leading to presentation of audit opinions in November.
Hamze, the senior manager leading the engagement, said the audit will produce opinions on both the financial statements and the other pension information and will include separate reports on internal control over financial reporting and compliance. "Where we spend probably the most amount of time is on the investments, their valuation, and accompanying income, and then the total and net pension liabilities," Hamze said, identifying investments valuation and census data that feed actuarial estimates as priority audit areas.
Jen Aris, a partner on the engagement, introduced the client service team and the specialists who will support the audit, including an actuarial specialist and a third‑party investment valuation firm, Harvest Investments. Aris emphasized Crowe’s independence and role as a component auditor for the State of California and described how Crowe will coordinate with internal audit to use internal reports for risk assessment.
On Benefit Connect (the Pension Solution), Crowe said the system is not considered financially significant for the 2025 audit because information from that system is not materially included in the 2025 financial statements. "Although it's not live, we haven't determined it to be financially significant for this year," Aris said, adding that Crowe began pre‑implementation procedures earlier in the calendar year and will perform pre‑ and post‑implementation testing around go‑live in the fall to prepare for potential 2026 significance.
Crowe described a hybrid fieldwork approach: teams will be on‑site for multiple weeks to perform internal control walk‑throughs and testing when that is most effective, and remote procedures will be used for sampling and preparatory work. The firm said it will present a required communication letter in November summarizing audit results and any critical matters.
Next steps include year‑round execution of interim procedures, year‑end substantive testing, and presentation of audit opinions and communications to the committee in November.
