CSD-RT RFP Recordkeeping_Administration Services Response 3-

This report is intended for use by the management of the Variable Annuity Life Insurance Company ("VALIC") and its subsidiaries.

VALIC Retirement Services Company ("VRSCO") and VALIC Financial Advisors, Inc. ("VFA"), its user entities, and the independent

auditors of its user entities, and is not intended and should not be used by anyone other than these specified parties.

Click

VALIC

.com 30

Paper Checks

SAP is a fully integrated financial system that is utilized to disburse checks processed through the core systems of

VALIC, as well as those entered manually into SAP for policy/group disbursements. The types of checks created

are defined below:

Automated checks – Checks created directly from the record keeping system transactions without the

intervention of business personnel.

Automated manual (on-demand) checks – Checks that process through an automated workflow,

referred to as Transaction Account Processing System (TAPS) with business personnel intervention but

without accounting personnel intervention.

Non-automated on-demand checks – Checks that are not processed through an automated workflow

and require business and accounting personnel intervention.

After each core system completes its cycle, transactions are transmitted to SAP for further processing. All

(automated and non-automated) SAP distributions are screened for OFAC Compliance through the AIGWatch

List database (Acuity) and potential matches are reviewed by Compliance, before checks are released.

SAP segregates checks according to entity and core system. SAP further segregates transactions based on special

handling codes used to allow special processes to occur in the disbursement jobs. Once the SAP nightly cycle

completes, the check output is transmitted to a VALIC server where Accounting releases the checks for printing.

The check writer printers are located in a secured room in Accounting. Only appropriate individuals have access to

this room via the security card reader system

(7.1)

. The door to the secured room automatically locks when closed.

Accounting is responsible for printing all checks, comparing printed check to source document for all policy (non-

automated) manuals, vendor payments, as well as ensuring that the instructions for special handling codes are

followed. Checks are picked up by Mail Services for mailing.

Before entering non-automated check requests in SAP, approvals are validated against the On-Demand

Disbursement Authorization table to confirm requests are within the appropriate authorization levels

(7.2)

. Once

request is entered into SAP and check is printed, Accounting compares the payee, address, amount, document

number and issuing company to the TAPS check request to ensure data was entered correctly

(7.3)

. If Accounting

notes an error, he/she notifies the Accounts Payable Unit to take appropriate action.

Checks are then mailed out and the supporting documentation is submitted to Document Management for

scanning into AWD.

The Accounting Specialist role in the check writer room is limited to the printing and mail preparation of checks.

They cannot enter disbursement transactions for check issuance.

III. Description of the VALIC Defined Contribution Plan Administration System