A financial audit and management review of Virginia's $1.3 billion state and local government employe pension fund have concluded that the fund's record keeping and operations are a shambles.

The situation, although dangerous, does not yet threaten the pensions of any of the 238,000 present and former government workers covered by the fund - many of them in Northern Virginia - the reports said.

But the fund is so poorly run that its workers have easily robbed it of more than $110,000 in recent years, one report said. A Northern Virginia legislator who has reviewed the reports yesterday described them as "rather devastating" and predicted they would force a personnel shake-up at fund readquarters in Richmond.

One report warned of an ever-widening gap between the fund's liabilities and its assets, a condition that "could, in time, weaken the soundness" of the retirement system.

The reports were replete with numerous instances of shoddy management:

Accounting procedures of the Virginia Supplemental Retirement System (VSRS) have been so bad, one report said, that a state financial audit begun six years ago still has not been completed.

Both public and private auditors have had to spend an entire year reconciling accounting ledgers that the VSRS is supposed to keep in continuing balance.

The report of the Joint Legislative Audit and Review Commission said accounting of employe contributions to the fund at one time was $10 million out of balance because of sloppy record-keeping.

Records of many individuals participating in the pension fund have been lost and misfiled. The loss of records has prompted numerous lawsuits filed by estates by deceased employes.

Until early this year, employe contributations were being refunded to employes who withdraw from the fund without verification that the contributions had in fact been made.

The only record of claims and premium payments on the VSRS group life insurance policy was a handwritten note book that was never reconciled with life insurance company records.

Three former fund employes have been convicted of theft and a dozen persons, not employes of the agency, were charged with helping them, according to the reports.

Despite mismanagement of the fund, the Audit and Review Commission concluded that at present "there is no evidence that VSRS cannot meet its obligations" to 30,000 retirees and the 208,000 state and local government employes and school teachers now contributing to the fund.

The study was presented earlier this week to the Audit and Review commission, composed of 11 state legislators, and to a separate retirement system study commission that is considering legislation to assure adequate funding of public employe pensions in the future. There have been many suggestions of troubles in the fund, but the reports contain the most detailed information made public on how severe the troubles are.

Del. Vincent F. Callahan (R. Fairfax), a member of both commissions, said in an interview that he believes the study will force a personnel shakeup at VSRS.

The report he said, "talks about not only poor management, but poor managers, starting at the top . . . A lot of plans are in trouble around the country. We don't want that to happen in Virginia."

One report said the "present weaknesses in financial management are primarily the result of lack of qualified personnel." VSRS director Glen D. Pond, the report said, "acknowledged that he was inexperienced in accounting and financial management when he was hired in 1973.Additional staff with these skills were not hired until 1977."

Until 1977, the report said, an accountant who had worked for the agency for 26 years following his graduation from high school was the chief financial control officer of the $1.3 billion fund. The report called the employe "dedicated and competent," but not trained to manage a "complex financial system."

In 1977, Pond turned over financial management of the VSRS to an operations manager and assistant director described by the commission report as "data processing specialists primarily concerned with developing a new data processing system."

The commission report said VSRS staff said they complained to Pond about financial management under the two data processing specialists, but Pond reaffirmed their authority. Both have since left the agency. "Adequate financial controls were not installed," the commission said.

Pond has rejected the commission's characterizations of VSRS management, but has concerned in all but two of its 13 recommendations for management changes. In his letter of response two weeks ago, he characterized the fund as a "financially sound, well managed retirement system."

Pond said many of the changes urged by the commission already were in progress and he blamed VSRS problems on rapid growth and refusal of the state personnel office to approve additional staff for the fund.

In a rebuttal to Pond's response, the commission staff said that a VSRS consultant concluded in 1976 that staffing levels were adequate. It also noted that 35 or 30 VSRS staff addition requests since 1973 were approved.

The only praise in the commission report for the retirement system was for its investment management policies. The retirement system's once ultraconservative investment policies were overhauled in the early 1970s under the direction of former Gov. Linwood Holton's secretary of finance, Walter, W. Craigie Jr.

Investments are now managed by outside management teams responsible to the seven VSRS trustees. While praising this system, the report nevertheless noted that common stock holdings of the pension fund have been performed well in recent years. The trustees recently hired by a new common stock investment team is an effort to improve on past performance.

Pond also is answerable to the seven-member board of trustees, whose members are appointed by the governor. The trustees have promised to respond to the commission report on Dec. 12.