Audit of Blue Cross Blue Shield of Utah's Unfunded Pension Costs for 1986 Through 1997

EXECUTIVE SUMMARY:

Our objectives were to:  (1) determine if pension costs for plan years 1986 through 1997 were funded in accordance with the Federal Acquisition Regulations and the Cost Accounting Standards and (2) identify and properly account for any accumulated unfunded pension costs, including unallowable and reassignable portions.  We found that Utah did not properly fund the pension costs allocable to the Medicare contracts for plan years 1993 and 1995.  In addition, Utah did not identify or properly account for accumulated unfunded pension costs.  As a result, Utah understated the January 1, 1998, accumulated unallowable pension costs by $202,066 ($174,774 for the Other segment plus $27,292 for the Medicare segment).  We recommended that Utah identify accumulated unallowable pension costs of $202,066 ($174,774 for the Other segment plus $27,292 for the Medicare segment) as of January 1, 1998.  Utah concurred with our recommendation.