B-201941.OM, MAR 13, 1981

B-201941.OM, MAR 13, 1981

SUBJECT: CHARGING FOR COSTS OF GAO FINANCIAL REVIEWS OF FEDERAL PENSION PLANS (FILE B-201941)

ASSOCIATE DIRECTOR, AFMD/AFA - RONALD J. POINTS:

THIS RESPONDS TO A REQUEST FROM MR. THOMAS J. MULDOON, A MEMBER OF YOUR STAFF, FOR OUR OPINION ON WHETHER THE GENERAL ACCOUNTING OFFICE (GAO) IS TO PERFORM REVIEWS OF THE FINANCIAL AND ACTUARIAL STATEMENTS OF FEDERAL PENSION PLANS, AS PROVIDED FOR IN 31 U.S.C. SEC. 68B, ON EITHER A REIMBURSABLE OR NONREIMBURSABLE BASIS. FOR THE REASONS STATED BELOW WE BELIEVE THAT THE CONGRESS NECESSARILY INTENDED THAT THIS OFFICE IS TO ABSORB THE COSTS OF THESE REVIEWS AS PART OF ITS NORMAL OPERATING FUNCTIONS.

SECTION 122 OF PUB. L. NO. 95-595, 31 U.S.C. SEC. 68B, PROVIDES THAT IF REQUESTED BY EITHER HOUSE OF CONGRESS (OR BY COMMITTEE THEREOF) OR IF DEEMED NECESSARY BY THE COMPTROLLER GENERAL, THAT GAO SHALL REVIEW FINANCIAL AND ACTUARIAL STATEMENTS FURNISHED BY COVERED FEDERAL PENSION PLANS FOR THE PURPOSE OF DETERMINING WHETHER THE REPORTING REQUIREMENTS OF 31 U.S.C. SEC. 68A ARE BEING ADHERED TO.

WE FIND NO STATUTORY PROVISION SPECIFICALLY DEALING WITH THE QUESTION WHETHER THIS OFFICE IS TO CONDUCT REVIEWS PURSUANT TO 31 U.S.C. SEC. 68B ON EITHER A REIMBURSABLE (I.E., CHARGING FEDERAL PENSION PLANS FOR THE COST OF SUCH REVIEWS) OR A NONREIMBURSABLE BASIS. FOR THE FOLLOWING REASONS, HOWEVER, WE BELIEVE THAT CONGRESS NECESSARILY INTENDED THAT THIS OFFICE IS TO ABSORB THE COSTS THEREOF AS PART OF ITS NORMAL OPERATING FUNCTIONS. THE VERY LANGUAGE OF 31 U.S.C. SEC. 68B PLACES AN ADMINISTRATIVE RESPONSIBILITY ON THIS OFFICE WHICH IS SIMILAR TO IF NOT IDENTICAL WITH OUR NORMAL AUDIT AND REVIEW FUNCTIONS, THE PERFORMANCE OF WHICH IS GENERALLY IS ON A NONREIMBURSABLE BASIS. IN THOSE LIMITED CASES WHERE WE PERFORM WORK ON A REIMBURSABLE BASIS THERE EXISTS SPECIFIC STATUTORY AUTHORIZATION TO CHARGE FOR THE COST OF SUCH WORK. FOR EXAMPLE, 31 U.S.C. SEC. 68B GIVES THIS OFFICE SPECIFIC AUTHORITY TO CHARGE GOVERNMENT CORPORATIONS FOR THE FULL COSTS OF AUDITING THEIR FINANCIAL TRANSACTIONS.

ONE REFERENCE IN THE LEGISLATIVE HISTORY OF PUB. L. NO. 95-595 PROVIDES FURTHER SUPPORT FOR OUR CONCLUSION, INDICATING THAT OUR OFFICE ORIGINALLY ENVISIONED THE PERFORMANCE OF THE SUBJECT REVIEWS ON A NONREIMBURSABLE BASIS. IN THE STATEMENT OF THE DEPUTY DIRECTOR, FEDERAL PERSONNEL AND COMPENSATION DIVISION, DATED JULY 24, 1978, BEFORE THE SUBCOMMITTEE ON LEGISLATION AND NATIONAL SECURITY, COMMITTEE ON GOVERNMENT OPERATIONS, THE DEPUTY DIRECTOR STATED:

"WE HAVE DEVELOPED SOME PRELIMINARY ESTIMATES OF WHAT IT MIGHT COST THE GENERAL ACCOUNTING OFFICE EACH YEAR TO IMPLEMENT ITS REQUIRED FUNCTIONS UNDER THE BILL. WE ESTIMATE THESE COSTS TO BE $1 MILLION FOR THE NECESSARY AUDIT WORK; $1 MILLION FOR ACTUARIAL WORK; AND $.5 MILLION FOR PRESCRIBING REPORTING STANDARDS AND FORMATS. THIS TOTAL OF $2.5 MILLION WOULD APPLY FOR THE FIRST FEW YEARS AFTER THE BILL'S ENACTMENT AND SHOULD SUBSTANTIALLY DECREASE LATER TO PERHAPS $1 MILLION A YEAR. THESE ESTIMATES ARE BASED ON THE ASSUMPTION THAT SOME 38 SEPARATE RETIREMENT PROGRAMS WOULD BE COVERED BY THE BILL."

IF YOU HAVE ANY FURTHER QUESTIONS PLEASE DO NOT HESITATE TO CALL ME.

DIGEST:

IN RESPONSE TO QUESTION WHETHER GAO IS TO PERFORM REVIEWS OF FINANCIAL AND ACTUARIAL STATEMENTS OF FEDERAL PENSIONS, AS PROVIDED FOR IN 31 U.S.C. SEC. 68B, ON EITHER A REIMBURSABLE OR NONREIMBURSABLE BASIS, OGC CONCLUDES THAT CONGRESS NECESSARILY INTENDED THAT THIS OFFICE IS TO ABSORB COSTS OF THESE REVIEWS AS PART OF ITS NORMAL OPERATING FUNCTIONS.