Financial Audit:

Pension Benefit Guaranty Corporation's 1991 and 1990 Financial Statements

AFMD-92-35: Published: Mar 2, 1992. Publicly Released: Mar 2, 1992.

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GAO reviewed the Pension Benefit Guaranty Corporation's (PBGC) financial statements for the fiscal years ended September 30, 1991 and 1990.

GAO found that: (1) PBGC made a major commitment to correct internal control weaknesses GAO identified during its attempt to audit fiscal year (FY) 1990 financial statements, but did not make sufficient progress for GAO to complete a financial audit of FY 1991 financial statements; (2) PBGC did not develop the documentation and support for the techniques and assumptions it used to estimate its reported $7.8-billion liability for future benefits or assess the completeness and accuracy of the data used by each estimating technique; (3) other internal control and system weaknesses in accounting and premium accounting operations also affected the reliablity of the PBGC financial statements for FY 1991; (4) unaudited PBGC FY 1991 financial statements indicated that the Single Employer Guaranty Fund continued to deteriorate during the year; (5) while the Fund has reported more than $5 billion in cash and investment assests, it's approximately $600-million loss for FY 1991 increased the Fund's accumulated deficit to over $2.5 billion; (6) underfunding on single employer plans rose from more than $20 billion in 1989 to $31 billion in 1990 and is concentrated in certain troubled industries; (7) the future of the Single Employer Guaranty Fund will depend largely on the economic well-being of those troubled industries; and (8) PBGC financial statements have limited reliability.