Audit of Veritus' Unfunded Pension Costs for the Period Covering 1993 Through 1996

EXECUTIVE SUMMARY:

The objectives of this audit were to determine if the pension costs Veritus allocated to the Medicare contracts for plan years 1993-1996 were funded in accordance with Federal requirements, and to identify and properly account for any additional accumulated unfunded pension costs.  Veritus funded the pension costs allocable to the Medicare contracts for plan years 1993-1996 in accordance with requirements.  However, Veritus did not correctly identify nor properly account for its accumulated unfunded pension costs.  Thus, Veritus overstated its accumulated unfunded pension costs by $157,447 and its accumulated reassignable costs by $108,605 as of December 31, 1996.  We recommended Veritus should decrease its accumulated unallowable unfunded costs by $157,447 and its accumulated reassignable pension costs of the Medicare segment by $108,605 as of December 31, 1996.  Veritus agreed with our recommendations.