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CalSTRS audit committee approves 2025–26 risk‑based employer audit plan
Summary
The CalSTRS Audits and Risk Management Committee approved a 2025–26 risk‑based audit plan that increases employer audits to 125, prioritizes special pay and salary reporting, and reserves audit hours for the Pension Solution (Benefit Connect) implementation.
The California State Teachers Retirement System Audits and Risk Management Committee on May XX approved a 2025–26 risk‑based audit plan that raises the number of employer audits to 125 and focuses audit work on special pay and salary reporting.
The plan, presented by Chris Wall, assistant director of employer audits, was described as data‑driven and risk‑based. "Our audit plan this year is to complete 125 employer audits, which is an increase from 110 that we did last year," Wall said. He told the committee the team uses analytics to identify outliers in reported pay rates, earnings, special pay and unused sick leave when selecting employers for review.
The committee was told special pay and salary account for about 88 percent of the employer population under review, and the audit team plans to reserve some audits of medium and low‑risk employers to maintain coverage breadth. Wall also said the audit group will change its terminology from "base compensation" to "salary" to align with the upcoming creditable compensation simplification, noting draft reports will begin issuing after July 1, 2025.
Internal audit manager Erin Satterwhite explained how the internal and employer audit risk assessments are combined to form an overall audit universe, prioritized by complexity, interdependencies and available resources. "We prioritize our risk and consider ratings such as complexities, whether a process is manual or automated, and interdependencies within the agency," Satterwhite said.
Board members asked whether prior audits had uncovered material weaknesses that would change the plan; staff said a thematic recap of the last fiscal year will be provided in September and that any significant findings are reflected in the audit update materials already circulated to the committee.
The committee moved and approved the proposed audit plan by voice vote. The plan also reserves audit hours to monitor Pension Solution (often referred to as Benefit Connect) during its go‑live window to avoid impeding implementation while retaining the ability to step in if issues arise.
What happens next: staff will proceed with employer audit selection and scheduling under the approved plan, provide the committee a thematic recap of the prior year’s audit findings in September, and issue draft audit reports after July 1, 2025.
