CalSTRS audit team exceeded employer-audit target; 175 new findings and a backlog tied to AB 1667

Chris Wall, lead for employer audits at CalSTRS, told the Audits and Risk Management Committee that the employer-audit program completed 112 audits in 2024–25, exceeding a 110-audit goal and covering roughly 64,000 members. The audits produced 175 new findings this year.

Wall and other audit staff described the most prevalent finding types: salary-reporting errors (including improperly reported additional assignments and unreported retroactive adjustments), noncreditable compensation (including lump-sum payments for PEPRA members and inconsistent treatment across employee groups), and compensation items not approved by employer boards. CalSTRS said it uses a comprehensive audit resolution process; the goal is to validate resolution of findings within one year, though some take longer.

Staff reported 149 findings resolved from the plan and 205 findings still in progress; 106 of those are from the current audit plan while 99 are older than one year and 65 are between one and two years old. Wall said older, larger employer audits are a major contributor to the aging items and that the implementation of AB 1667 has lengthened some resolution timelines because employers must now provide impacted-member lists within 60 days. He said CalSTRS will re-audit some employers and is working with the audit resolution team to tighten processes for older findings.

Board consultant Bob Yetman told the committee that the expanded scope under AB 1667 helps explain why some findings appear outstanding and that the board should continue asking about multi-year open findings; he praised staff for balancing auditor independence with stakeholder trust. Committee members also queried how upcoming Pension Solutions/Benefit Connect changes will affect audit procedures. Staff said they have created a data solutions team to analyze Benefit Connect reporting and are training auditors in advance; they expect a transition period and will adjust the audit plan and procedures as live data from the new system become available.

No public comments were received on the audit-plan results item during the meeting. Staff said some audits targeted for rework will be completed and reported to the committee in November.