The New Orleans Fire Fighters Pension and Relief Fund, the beleaguered plan that has become a hot-button issue for Mayor Mitch Landrieu’s administration, has about $85 million in net assets available to pay benefits but faces five times that much in expected future costs, according to the findings of an audit report presented to the City Council’s Budget Committee this week.

Based on the number of employees enrolled, the so-called “new retirement system,” which includes firefighters employed beginning in 1968 and some longer-serving employees who chose to join it, will need about $424 million to pay future benefits or fund administration expenses, according to the audit conducted by Duplantier, Hrapmann, Hogan and Maher.

Further, “a large percentage of the new system’s investments are long-term positions and are not liquid,” the report said. “This may have a negative impact on future cash flow.”

Auditors issued the fund a “clean opinion” for 2013 but included an “other matters” section in their report to point out that area of concern, auditor Michelle Cunningham told the council committee.

The fund also saw its investment income plummet by nearly $40 million in 2013 compared with the previous year. The drop was largely the result of bad investments that had to be written down or written off entirely, auditors found.

The fund’s liabilities grew from $56 million in 2012 to $62 million in 2013, according to the report.

The audit results come as the city is facing a Supreme Court judgment directing it to hand over $17.5 million in back payments to the pension fund. Since Landrieu became mayor, the city has not been making regular payments to the fund as required by state law, citing the fund’s history of poor investments.

Voters statewide will be asked Nov. 4 to approve a constitutional amendment authorizing the city to raise property taxes for police and fire protection. If the request passes both in the state and in Orleans Parish, the City Council would then be able to put the millage rate increases on a local ballot. As much as 5 mills could go to fire protection, which the administration says would include the pension fund.

But Landrieu has made clear that he doesn’t believe the fund should receive any money from taxpayers unless it is reformed.

“The Firefighters Pension Fund made many bad investments over the years,” Chief Administrative Officer Andy Kopplin said in a written statement. “We continue to meet with the fund to urge for major changes to its structure and investment policies. ... In the end, we all want to make the system sustainable for the active and retired firefighters. In this process, Mayor Landrieu has committed to ensuring that no retiree will ever go without a pension check.”

The Budget Committee received better news from the city’s annual outside audit. The audit represented the first time in six years that the city has prepared a comprehensive annual financial report, auditor Albert “Joey” Richard, of the firm Postlethwaite & Netterville, said. The comprehensive report includes financial information over a long period of time — in most cases back 10 years — to provide a more thorough context in which to view the city’s financial position, Richard said.

According to the audit, the city’s general fund balance grew from a deficit of $9.3 million in 2012 to a positive balance of $17 million in 2013, “obviously a good improvement,” Richard said.

Meanwhile, the city made “significant progress” in reducing the deficit in its fund made up solely of money from the Federal Emergency Management Agency. The shortfall in money actually received from FEMA compared to what the city was expecting was cut from $23.5 million in 2012 to $15.4 million last year.

The audit report resulted in two “findings,” or serious issues, related to information technology and overtime pay. That’s down from six findings last year and 13 in 2010.

General controls over the city’s information technology system need improvement, Richard told the council committee. The IT system has lax controls and a poor system of checks and balances that expose it to possible abuse, he said. In some instances, he said, the same person is allowed to post, approve and reconcile a financial transaction. If such duties are not divided between at least two people, the city is not protected against possible manipulation or fraud, Richard said.

Auditors said they also found that several employees exceeded the civil service system’s 416-hour overtime limit in 2013. The total does not include police officers.

Assistant CAO Cary Grant said the city is aware of that issue and intends to propose a rule change. He said it might set a sliding scale for overtime pay so that police officers, firefighters and Emergency Medical Services personnel, who are often out of compliance with overtime limits because of the way their schedules are set, won’t be subject to the same limit as other city workers.