Florida Workers’ Compensation Joint Underwriting Association Audit Committee Approves 2011 Audit
May 18, 2012
The Florida Workers’ Compensation Joint Underwriting Association (“FWCJUA”) Audit Committee (“Committee”) met yesterday, May 17, 2012, during which it approved filing of the organization’s 2011 financial audit with the Florida Department of Financial Services (“DFS”).
Following the reading of the anti-trust preamble, the Committee heard an update on the FWCJUA’s federal tax status. Prior to 2007, the organization was considered a taxable entity from the perspective that, under Florida law, it was self-controlled, as opposed to the State of Florida having ultimate authority. The pertinent statute was ultimately changed so that the FWCJUA could be tax-exempt for federal purposes.
One of the 2012 FWCJUA Business Plan objectives requires that the Committee monitor Internal Revenue Service (“IRS”) progress on the development of a regulation or any other published guidance on what constitutes an “integral part” of a state, local or Indian tribal government for federal income tax purposes so that issuance of a Private Letter Ruling may be further pursued as appropriate. Currently, the FWCJUA is no longer filing a tax return under the position that it is an “integral part of the state”–a separate entity that has been established to meet a goal or need of the State on behalf of the State and actually controlled by the State. It was reported at yesterday’s meeting that the IRS is still in a “no-rule position” over this matter. Therefore, the Committee will continue to watch the issue.
Next, the Committee reviewed highlights of the FWCJUA’s 2011 financial audit, presented by Liz Fabi-Piller, a representative of the FWCJUA’s independent financial auditor. She stated that the numbers had not changed from unaudited numbers discussed at a previous Committee meeting.
Referring to the balance sheet, Ms. Fabi-Piller noted a decrease of $3.6 million in total admitted assets, which she said can largely be attributed to a $5 million dividend payment made in 2011. She pointed out an increase in unearned premiums from $3.5 million in 2010 to $5.4 million in 2011, which she said is due to a 48 percent increase in the amount of policies written in 2011, compared with 2010. For the same reason, the FWCJUA had an increase in net premiums earned from 2010 to 2011, along with an increase in losses and loss adjustment expenses incurred. She also noted that a $2.8 million claim was recorded in 2011.
The Committee then passed a motion to approve the 2011 audit report and authorize its filing with the DFS. A separate motion was passed to approve the filing with DFS of a report stating that no significant deficiencies or material weaknesses in internal control were found during the audit.
As its next agenda item, the Committee confirmed the remainder of its quarterly meeting schedule for 2012. Teleconference meetings are scheduled for August 15 and November 15.
Dave Webber, the FWCJUA’s Controller, provided updates on Committee Charter Procedures Checklist, which includes communication, understanding, financial oversight and other items.
Before adjournment, the Committee passed a motion to confirm the FWCJUA’s independent financial auditor for the 2012 audit. An extension of the three-year engagement currently in place will be discussed at the Committee’s August and November meetings.
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