Audit Report on the Financial and Operating Practices of the Uniformed Fire Officers Association Family Protection Plan

AUDIT REPORT IN BRIEF

The Comptroller’s Office performed an audit on the financial and operating practices of the Uniformed Fire Officers Association Family Protection Plan (the Plan) for Fiscal Year 2002. The Plan, which was established to receive contributions from the City of New York, provides health and welfare benefits to eligible uniformed fire officers and their dependents. The Plan is required to conform to Comptroller’s Directive 12, which sets forth accounting, auditing and financial guidelines for City welfare funds and their boards of trustees. As of June 30, 2002, the Plan reported net assets of $6,999,885.

The Plan generally complied with the procedures and reporting requirements of Directive 12. In addition, the Plan generally complied with its benefit-processing and accounting procedures, and those procedures were adequate and proper. Furthermore, the Plan’s administrative expenses were generally appropriate and reasonable. All City contributions were accounted for and deposited in the Plan’s bank account. Also, the Plan’s expenses were accurately recorded in its trial balance and cash disbursements journal, and adequate supporting documentation was maintained for most expenses paid. However, we found some weaknesses in the Plan’s financial and operating practices. Specifically, the Plan:

• Misstated benefit and administrative expenses on its financial statements and its Directive 12 filing.
• Made questionable reimbursements, totaling $3,805, to the Chairman of the Board of Trustees (Chairman) and two Trustees.
• Made improper benefit payments totaling $4,446.
• Made improper payments totaling $13,141 for Union-related expenses.
• Did not maintain complete and accurate records of those persons for whom it is paying COBRA benefits and of the premium payments received from these individuals to pay for the coverage.
• Paid claims for dependents whose eligibility was not documented.
• Did not maintain complete employee attendance records detailing the time-in and time-out and absence or lateness to be charged against earned vacation or sick leave.

To address these issues, we recommend that the Plan:

• Ensure that administrative and benefit expenses are recorded accurately on its financial statements, in accordance with Comptroller’s Directive 12.
• Recoup $3,805 in questionable reimbursements from the Chairman and the Trustees.
• Ensure that it pays for benefits only for eligible individuals, in accordance with its guidelines.
• Discontinue paying Union expenses.
• Recoup $13,141 from the Union for the improper payments cited in this report.
• Maintain complete and accurate records of COBRA premium payments received.
• Provide COBRA benefits only to individuals who make the required premium payments.
• Maintain copies of all documentation in members’ permanent files to substantiate eligibility of dependents.
• Maintain daily attendance records for its employees.