SAIF Corporation, Board of Directors Audit Committee Minutes for January 28, 2008

Saif Corporation, Executive Offices

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SAIF CORPORATION BOARD OF DIRECTORS AUDIT COMMITTEE Thursday SAIF Corpration Febry 28, 2008 15333 SW Sequoia PKW 3:0 p.m Tigard, Oregon Roll Call: John Endicott Catherine Travis SAIF Corporation Personnel Present: Brenda JP Rocklin, President and CEO Cathy Pollino, Chief Internal Auditor Casey Baumert, Corporate Internal Auditor Jerry Dykes, Chief Financial Officer Theresa McHugh, Vice President of Financial Services Colleen Sealock, Vice President of Operations and Human Resources Garry Robinson, Technology Service Manager Stephanie Robinson, UW Management Assistant Sara Padilla, Executive Assistant Approval of Audit Committee Minutes Motion Ms. Travis, Second Mr. Endicott to approve the minutes of the September 10 and September 11, 2007 meetings. The vote was unanimous, and the motion was carried. Dividend Application Review This audit was a review of the dividend application system and the manual processes involved in calculating and distributing dividends to policyholders. The audit tested the system’s ability to accurately calculate dividend amounts and identify eligible recipients. Ms. Pollino reported that the development of the new dividend application system went smooth and all potential problems were identified and corrected before dividends were mailed to policyholders. Premium Audit Selection Audit This audit was a review of the Premium Audit selection process to determine ...

Informations

• Publié par: Ustley
• Nombre de lectures: 78
• Langue: English

Extrait

SAIF CORPORATION BOARD OF DIRECTORS AUDIT COMMITTEE Thursday SAIFCorporation February 28, 200815333 SW Sequoia PKW 3:00 p.m.Tigard, Oregon Roll Call: John Endicott Catherine Travis SAIF Corporation Personnel Present: Brenda JP Rocklin, President and CEO Cathy Pollino, Chief Internal Auditor Casey Baumert, Corporate Internal Auditor Jerry Dykes, Chief Financial Officer Theresa McHugh, Vice President of Financial Services Colleen Sealock, Vice President of Operations and Human Resources Garry Robinson, Technology Service Manager Stephanie Robinson, UW Management Assistant Sara Padilla, Executive Assistant Approval of Audit Committee Minutes Motion Ms. Travis, Second Mr. Endicott to approve the minutes of the September 10 and September 11, 2007 meetings.The vote was unanimous, and the motion was carried. Dividend Application Review This audit was a review of the dividend application system and the manual processes involved in calculating and distributing dividends to policyholders.The audit tested the system’s ability to accurately calculate dividend amounts and identify eligible recipients. Ms. Pollino reported that the development of the new dividend application system went smooth and all potential problems were identified and corrected before dividends were mailed to policyholders. Premium Audit Selection Audit This audit was a review of the Premium Audit selection process to determine whether the system was properly identifying policyholders for compliance audits and to find better ways to target discretionary audit resources. Ms. Pollino reported that the system was not properly identifying all compliance audits and that some minor modifications can be made to the audit selection criteria that will better allocate discretionary audit resources.Several recommendations for improving the selection process were made. The recommendations included making system

SAIF Corporation | 400 High St | Salem, OR 97312 | P: 800.285.8525

Board Audit Committee February 28, 2008 Page 2 changes to insure that compliance audits are properly identified; using policyholder characteristics most associated with past audit differences to select and prioritize discretionary audits; and placing remaining policies on a cycle for periodic review. It was also recommended that a request be made of the Department of Consumer and Business Services to clarify and update the premium audit administrative rules. Lawson Access Controls Audit Lawson is SAIF’s financial management system. This audit reviewed access rights in the Lawson system and determined whether duties within the system were properly segregated. Ms. Pollino reported that there were certain areas where duties should be segregated and access to the system could be improved.Internal audit made recommendations to improve access rights and ensure proper segregation of duties. Claims Information Audit This audit was a review of the accuracy and completeness of key information captured by the Claims Division and how the accuracy of that information impacts other areas of the company. Ms. Pollino reported that most of the key data elements were being entered accurately and completely by SAIF employees, with a couple exceptions. However, certain data elements were not accurately converted from SAIF codes to codes used by the National Council on Compensation Insurance (NCCI). Mr. Robinson advised that a project is underway to better translate SAIF codes to NCCI codes and final verification of the new coding is nearly complete. Budget Management Letter A review of SAIF budget system was begun in June 2007 to determine if the process could be improved. This audit was suspended upon Ms. McHugh’s employment with SAIF since she was going to conduct her own evaluation of SAIF’s budget process and internal audit did not want to duplicate efforts.Information gathered in the early stages of this review was provided to Ms. McHugh. Ms. McHugh reported that following further investigation she will have a clearer idea of what the budget system should look like and how it should coordinate with SAIF’s other systems. EAIP Management Letter Internal Audit undertook a review of the EmployeratInjury Program. In this program, SAIF provides money for employers to use to modify their workplaces and/or provides wage subsidies in order to return injured workers to work more quickly. The money is then reimbursed to SAIF by the Department of Consumer and Business Services. Ms. Pollino reported that presently EAIP has many manual processes, but the manual processes seem to be working. Internal audit reported the areas where efficiency gains could potentially be made through better automation.

SAIF Corporation | 400 High St | Salem, OR 97312 | P: 800.285.8525

Board Audit Committee February 28, 2008 Page 3 Response to Deloitte’s Management Letter There was discussion of SAIF’s response to Deloitte and Touche’s management comment letter of August 17, 2007. SAIF’s letter covered the following recommendations: ƒFinancial Accounting –Other Than Temporary Impairment Analysis Deloitte recommended that SAIF improve its processes for valuing ‘other than temporary impairments.’SAIF agrees with the recommendation and has developed a more formalized process that was established effective December 31, 2007. ƒInternal Audit Risk Assessment Deloitte recommended a formal fraud risk assessment be performed to assess internal controls over financial reporting. SAIF is in the process of planning for this as part of the preparation for implementation of the NAIC Model Audit Rule. ƒInformation Technology Deloitte made the following recommendations. Enforce appropriate segregation of duties at the database level  Implement a process to periodically review user access on several systems  Modify password controls at the system level  Implement a process to retain testing and approval documentation  Review administrative access in Lawson  Ensure individual users have a unique user ID and user account  Mr. Robinson reported on SAIF’s response and continuing efforts to accommodate Deloitte’s IT recommendations. Information Systems has completed all but one of Deloitte’s recommendations. The remaining recommendation to validate employee access rights to applications that appropriately fit job requirements is currently being reviewed. Mr. Robinson also noted that, following Deloitte’s audit findings, front end security and password controls were adequately monitored and secured. Access on the back end of applications was not being aggressively enforced by those same security and monitoring controls. Information Systems has since added these securities to protect the database and network. Update on External Audits Ms. Pollino reported that the Secretary of State has yet to come to legal agreement with Deloitte on next year’s contract. Once an agreement is made, planning sessions will promptly commence. Ms. Pollino also reported that the Secretary of State has again contracted with Oliver Wyman to conduct the independent actuarial review. Mr. Dykes reminded the committee that the DCBS financial audit will begin this year. Upon completion of this audit, DCBS representatives may want to meet with SAIF’s Audit Committee.

SAIF Corporation | 400 High St | Salem, OR 97312 | P: 800.285.8525

Board Audit Committee February 28, 2008 Page 4 2007 Annual Report and Review of Risk Assessment and 2008 Internal Audit Plan Ms. Pollino provided the Audit Committee members with a report that outlined the internal and external audits completed during 2007, the status of audit recommendations, internal audit’s annual risk assessment, and a list of proposed audits for 2008.At the Board meeting on April 2, 2008, board members will be provided with the complete report of SAIF audit activities for 2007. Motion Mr. Endicott, Second Ms. Travis to approve the 2008 Internal Audit Plan. The vote was unanimous, and the motion was carried. Content and Timing of Future Meetings The next meeting of the Audit Committee is scheduled for June 11. The June meeting will include an update on claims overpayment tracking and recovery, calculations of PPD awards, policy pricing, and a followup on the confidential information audit with regard to claim notes. Other Business The Audit Committee members met with the Internal Audit staff without other staff present. There being no further business, the meeting adjourned at 3:51 p.m.  _________________________________  SaraPadilla, Executive Assistant

SAIF Corporation | 400 High St | Salem, OR 97312 | P: 800.285.8525