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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.
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V. Other information provided by VALIC: Management's response to operating effectiveness exceptions
Control Activitiy
Description of Exception
Management Response
7.8 Accounting performs daily
reconciliation of EFT annuity
disbursement totals processed
in SAP to the transmission file
received from the bank. Any
discrepancies are investigated
and resolved.
The daily manual EFT reconciliation
was not performed for the period
11/21/2015 - 7/24/2016.
The matter relates to the manual
Electronic Fund Transfers (EFT)
reconciliation that was performed on
a daily basis until November 2015.
In November 2015, AIG automated
the process and eliminated the
manual reconciliation process. A
technical server issue occurred
during the automated transmission
job in July 2016 that caused the
transmission of files to fail and were
inadvertently not sent to the bank.
The issue was identified and resolved
within 3 business days and all EFTs
were appropriately, completely,
and accurately processed. Because
the daily EFT manual reconciliation
process was eliminated, the error was
not detected immediately and upon
detection the manual EFT reconciliation
process was re-implemented.
To remediate the issue going forward,
Management communicated and
reinforced procedures to ensure the
bank’s EFT transactions are properly
reconciled to SAP on a daily basis.
Further, Management reinstituted
the daily manual reconciliation in
July 2016. In addition, Management
performs monthly bank reconciliations
between EFT transactions and the
SAP ledger (Control 7.11), which would
capture the transmission discrepancies
outstanding at month-end. Control 7.11
was tested with no exceptions noted.