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Audit (A-07-08-00280)

08-28-2009
Noridian Postretirement Benefit Segmentation

Executive Summary

Noridian Administrative Services, LLC (NAS), did not correctly update its Medicare segment postretirement benefit (PRB) assets from October 1, 2003, to January 1, 2006. As part of its request to change its accounting practice to the segmented accrual accounting method, NAS was required to identify and update the Medicare segmentís PRB assets. However, NAS made errors in its update computations. As a result, NAS understated the Medicare segment assets as of January 1, 2006, by $2.4 million. In addition, NAS did not make adjustments for participants who transferred into and out of the Medicare segment.

We recommended that NAS (1) increase the Medicare segment PRB assets by $2.4 million as of January 1, 2006, and (2) make adjustments for participant transfers in future updates. NAS concurred with our second recommendation, and our final report incorporated NASís comments regarding our first recommendation.

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