Audit of Blue Cross Blue Shield of Florida's Unfunded Pension Costs for 1994 Through 2003

EXECUTIVE SUMMARY:

The objectives of our review were to:  (1) determine if the accumulated unfunded pension costs identified in our prior review were accounted for properly; (2) determine if pension costs were funded in accordance with the Federal Acquisition Regulations (FAR) and the Cost Accounting Standards (CAS); and (3) identify and properly account for any additional accumulated unfunded pension costs.  We found that Blue Cross Blue Shield of Florida (Florida) did not properly account for the accumulated unfunded pension costs identified in our prior review.  Florida understated the accumulated unallowable pension costs by $2,346,492.  We also found that Florida funded pension costs in accordance with FAR and CAS.  As such, there were no additional unfunded pension costs to identify and update.  We recommended that Florida increase the accumulated unallowable pension costs by $2,346,492 and implement controls to identify and properly account for unfunded unallowable pension costs.  Florida agreed with our findings.