Actuarial audits and second opinions

Optimizing Foundations reviews the work of other actuaries: a full actuarial audit that replicates the valuation from the source data, or a second opinion on a specific question such as the discount rate, the mortality assumption, a benefit study or a withdrawal liability assessment. The firm's actuaries have audited more than 100 public pension and retiree medical plans and reviewed hundreds of private plans in transaction diligence.

What is included

• Replication audit. The liability and cost rebuilt independently from the census and plan provisions, compared with the reported results, with differences explained and quantified.
• Assumption review. Each economic and demographic assumption tested against the plan's experience, the relevant standards of practice and the range used by comparable plans.
• Method and compliance review. Funding method, amortization policy, asset valuation method and compliance with the governing standards (GASB, ASC 715, Section 430, the plan's own funding policy).
• Data review. Reconciliation of the census the actuary used to the sponsor's records and the prior year.
• Report. Written findings for the board or audit committee, with the actuarial detail in an appendix and a plain statement of whether the results can be relied on.

When sponsors ask for this

A new board or finance director wants assurance before signing. The auditors have questions the incumbent has not answered. A contribution or liability has moved more than expected. A withdrawal liability demand or a benefit study carries a number the sponsor cannot verify. A plan is changing actuaries and wants the prior work checked before the transition.

Common questions

Will this create a dispute with our actuary? A review is routine good governance and most actuaries welcome it. The firm's findings are presented factually, and most reviews confirm the results with a short list of observations.

How long does an actuarial audit take? A replication audit of a single plan typically takes six to ten weeks from receipt of data; a second opinion on one question, two to three weeks.

Every deliverable described here is reviewed by a second credentialed actuary before delivery. This page is general information about the firm's services and is not advice for any specific plan.