39 reviews

39 reviews

Here are highlights and links to 39 reviews of the Florida State Board of Administration from 2000 through today. Almost half have not previously been made available to the general public.

(1)

May 2000:

Legislative audit finds SBA could increase earnings and reduce risk and fees by using a different stock strategy; also calls for Legislature to increase oversight of SBA investment performance.

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(2)

June 2000:

Consulting firm, Independent Fiduciary Services, identifies problems in SBA real estate investments. (Note: An SBA spokesman said he could not locate a copy of the report as it was "well beyond our retention schedule.'' See 2004 internal SBA audit on real estate and investigation report by the American Federation of State, County and Municipal Employees.)

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(3)

September 2001:

Florida Auditor General finds policies and procedures for alternative investments are out of date or under development more than 18 months after creation of the unit.

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(4)

December 2001:

Accounting firm KPMG finds risks and gaps in monitoring and controls of securities lending program. SBA did not document how it decided which assets to loan to whom.

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(5)

March 2002:

Medallion Consulting urges SBA to move “as soon as possible’’ to develop a systematic risk assessment; cautions that effects of risk can include financial loss, fraudulent financial reporting and failure to adequately safeguard assets.

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(6)

2002:

Two critiques of SBA real estate investments:

 

 

 

• Accountant F. Marvin Doyal says properties may not be getting enough independent scrutiny. (SBA was unable to find a copy of the report as it is “no longer in our retention schedule.’’ See SBA’s 2004 real estate audit.)

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• Advisory group questions how and who makes real estate investment decisions.
(See SBA’s 2004 real estate audit.)

 

(7)

June 2002:

Legislative audit says alternative investments are “significantly underperforming.’’ Says SBA should slow down planned expansion of these investments until it has adequate reporting and policies.

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(8)

June 2002:

Auditor General identifies weaknesses in controls of computer systems for financial transactions.

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(9)

April 2003:

Auditor General again finds weaknesses in computer controls used in financial transactions.

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(10)

March 2004:

Accounting firm KPMG recommends better procedures and oversight to help guard against risks and potential fraud. Urges better accounting trail of trading activities.

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(11)

June 2004:

SBA internal audit finds high spending with use of cards issued to employees for travel and purchases of goods. Lack of adequate procedures “significantly increases the risk of unauthorized and inappropriate purchases.’’

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(12)

July 2004:

SBA internal audit of real estate unit reveals inadequate investment guidelines and monitoring procedures. Again recommends more rigorous risk assessment, but SBA says it doesn’t have funding.

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(13)

October 2004:

Legislative audit again finds alternative investments underperforming. With retirees counting on income from investment returns, auditors say SBA should be more concerned about short-term investment risks.

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(14)

April 2005:

Auditor General again finds deficiencies in computer controls needed to protect financial activities. Inadequate controls result in increased likelihood of error or fraud.

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(15)

July 2005:

July 2005: PriceWaterhouseCoopers finds lapses in computer security of SBA-managed funds belonging to Florida Prepaid College Board program.

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(16)

October 2005:

Consulting firm R.V. Kuhns & Associates reveals “information gap” and need for more oversight in use of complicated financial instruments called derivatives.

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(17)

October 2005:

Auditor General calls for reforms of SBA’s contracting procedures. Among other things, agency did not explain lack of competitive bidding for contract worth $506,000.

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(18)

December 2005:

Follow-up audit to KPMG evaluation finds 16 of 40 recommendations fully implemented and seven new areas of “potentially significant risks.’’ Recommendation to improve paper trail of trading activities is still “in progress.’’

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(19)

July 2006:

Mirroring portions of prior report by KPMG, SBA internal audit reveals need to increase monitoring of financial firms that manage public investments.

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(20)

November 2006:

Legislative audit repeats concerns about alternative investments.

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(21)

February 2007:

SBA internal audit finds 19 of 29 prior recommendations about real estate investments are fully implemented. Follow-up report raises new questions about monitoring and valuation of properties.

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(22)

March 2007:

SBA internal audit finds problems with controls and oversight of fixed-income unit. Auditors produce draft of report in December 2005, but it is not finalized until March 2007.

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(23)

March 2007:

SBA internal audit raises questions about how SBA calculates and monitors some investment returns.

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(24)

March 2007:

SBA internal audit again finds problems with SBA computer controls. Potential conflicts exist in staff assignments — fifth time a similar flaw is identified.

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(25)

June 2007:

SBA internal follow-up audit of securities lending strategy finds eight of 20 previous recommendations are fully implemented. New monitoring issues emerge.

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(26)

August 2007:

Power Point presentation stresses need to manage risks.

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(27)

August 2007:

SBA second internal follow-up audit finds staff has reduced use of cards to pay for goods and travel, though not by amount planned.

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(28)

October 2007:

Draft of second follow-up audit to an earlier KPMG report is completed. It has not been made public.

 

(29)

October 2007:

SBA internal follow-up audit on incentive compensation plan finds four of seven recommendations are fully implemented.

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(30)

December 2007:

Audit by Clifton Gunderson accounting firm finds widespread problems in five investment funds. Cites lax oversight.

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(31)

January 2008:

SBA update to audit about trading activities finds several recommendations are still “in progress,’’ including completion of an agency risk assessment.

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(32)

January 2008:

Auditor general finds SBA has adopted some but not all prior recommendations for improving management of contracts.

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(33)

March 2008:

Audit done for Florida Legislature says SBA should update risk and control safeguards for local government investment pool. Calls for agency to increase “transparency’’ and conduct an operational audit.

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(34)

March 2008:

Auditor general cites “significant deficiency’’ in running of SBA’s local government investment pool. Cites inadequate monitoring, among other problems.

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(35)

April 2008:

Auditor general finds continued problems with computer controls of investment activities and accounting.

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(36)

April 2008:

SBA internal audit questions SBA’s process for tracking and valuing complex securities.

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(37)

June 2008:

Second follow-up of SBA internal audit on incentive compensation plan finds recommendations are mostly implemented. But there’s still an issue with policy used to measure performance.

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(38)

November 2008:

Follow-up memo by SBA internal audit unit again recommends tighter controls when SBA lends its securities to financial institutions.

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(39)

January 2009:

Report by Deloitte & Touche accounting firm again calls for beefing up oversight and risk management. Says SBA should adopt procedures to keep it from violating securities laws.

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— Sydney P. Freedberg. Times Researcher Carolyn Edds contributed to this report.

Times special report
In audit after audit over the past eight years, the supposedly low-risk State Board of Administration was warned again and again about making risky, complex investments, without proper controls.

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