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YELLOW SHEET Office of the State Auditor of Missouri |
September 12, 2002
Report No. 2002-89
The following report is
our review of the County Employees Retirement System.
As noted in our prior audit, the County Employees' Retirement System (CERS) did not solicit proposals before entering into a contract with a firm to provide actuarial and consulting services in October 1998.� During 1999, 2000, and 2001, the CERS entered into several more contracts with the same firm, all without soliciting proposals.� The additional contracts entailed actuarial valuations and special analyses, general consulting services, retirement plan and computer system database redesigns and enhancements, and additional ongoing systems support.
During 1999, 2000, and 2001, the CERS paid the firm approximately $2,716,000 through these various contracts, including approximately $506,000 for actuarial services, $2,021,000 for other consulting and system design services, and $189,000 in related out-of-pocket expenses.� In addition, in January 2002, the CERS contracted with a new firm for actuarial services, also without soliciting proposals.
As noted above, the CERS reimbursed expenses totaling $189,000 to its prior actuarial/consulting firm during 1999, 2000, and 2001.� While invoices submitted by the company grouped the expenses into various categories such as general administrative expenses, airfare, transportation, lodging and meals, no supporting documentation was requested or received to substantiate the expenses claimed.
The CERS authorized and/or paid for some services prior to, or without, signing a valid contract.� To ensure each party's rights, responsibilities, and obligations are clearly understood and enforceable, signed contracts should be in place before the CERS authorizes commencement of, or pays for, future services.
After soliciting proposals, in December 1999 the CERS entered into an agreement with a law firm to serve as the system's legal counsel for an annual retainer of $75,000 (paid monthly) with any litigation services billed separately on an hourly basis.� While the law firm submitted detailed billings for litigation services, the CERS neither requested nor received detailed invoices to document the services provided under the retainer fee.� In October 2000, the CERS approved the law firm's request to raise the annual retainer to $150,000 effective December 2000.� An additional annual increase of 3 to 5 percent, not to exceed $7,500 annually, was approved by the CERS in February 2002.
To allow the CERS to monitor the matters being referred to the legal counsel and the services being provided, and to ensure the contract is fair to both parties, the CERS should require the law firm to submit monthly invoices detailing the dates, work performed, attorneys involved and time incurred for matters covered under the retainer agreement.� Previous law firms used by the CERS did submit such detailed invoices.