Summary

This operational audit focused on the State Board of Administration’s (SBA) Insurance Capital Build-Up Incentive Program (ICBIP) and the follow-up on prior audit findings from audit report Nos. 2004-074, 2004-084, and 2006-045.  Our audit included examinations of various transactions during the period March 2005 through February 2007, and selected actions taken through June 30, 2007.  Our audit disclosed:

Finding No. 1:   ICBIP reports did not include certain disclosures that could be helpful to the Legislature in evaluating ICBIP effectiveness.

Finding No. 2:   Governing statutes do not address how ICBIP receipts and related investment earnings may be used.

Finding No. 3:   Contrary to governing provisions of law, administrative costs for the ICBIP were paid from the Florida Hurricane Catastrophe Fund.

Finding No. 4:   The SBA had not adopted written policies and procedures addressing the inclusion of nonperformance provisions and dispute resolution provisions in contractual agreements.

Finding No. 5:   While the SBA had made progress in addressing the development of a contract administration program, written contract monitoring procedures had not yet been adopted.

The responses are included at the end of this report as Appendix A and Appendix B.