PENSION SCHEME AUDITS (updated July 2009)
1 Responsibilities of auditors and trustees
1.1 Under Regulation 2 of the Audited Accounts Regulations, it is the duty of the Trustees to obtain audited Financial Statements within 7 months of the end of the scheme year. Such financial statements should contain the information specified in the Schedule to the Audited Accounts Regulations and show a true and fair view of the scheme’s financial transactions during the year and of the disposition at the end of the scheme year of its assets and liabilities, other than liabilities to pay pensions and benefits after the end of the scheme year.
1.2 It is the responsibility of the Trustees to make appropriate arrangements to ensure that, in the preparation of the Financial Statements:
(a) Suitable accounting policies are selected and then applied consistently;
(b) Judgements and estimates are made that are reasonable and prudent
The Trustees are also responsible for safeguarding the assets of the scheme and hence for taking reasonable steps to ensure the scheme’s activities are conducted honestly and for the prevention and detection of fraud, error or non-compliance with law or regulations.
1.3 As Trustees, you are responsible for maintaining books and records in accordance with regulations made under the Pension Schemes Act 1993 and Pensions Act 1995, including The Occupational Pensions Schemes (Scheme Administration) Regulations 1996 (‘The Scheme Administration Regulations’). These should include written records of Trustees’ Meetings. You are also responsible for making available to us all the scheme’s books, financial statements and records and other information as may reasonably be required for the performance of our duties, including minutes of all Trustees’ Meetings.
The Scheme Administration Regulations require any sponsoring employer to notify Trustees of the occurrence of events relating to the employer which they believe to be of material significance to the Trustees or Managers or Professional Advisors. You hereby undertake to notify us of matters which may be relevant to the financial affairs of the scheme which have been notified to you by the sponsoring employers or have otherwise come to your attention.
1.4 We confirm that we are Registered Auditors, eligible to conduct audits under the Scheme Administration Regulations. We confirm that we will notify you immediately we become aware of the existence of any conflict of interest to which we are subject in relation to the scheme.
1.5 Our duty as scheme auditors is to report to you whether in our opinion:
- The financial statements presented to us for audit show a true and fair view of the financial transactions of the scheme during the scheme year and of the amount and disposition at the end of the scheme year of the scheme assets and of its liabilities, other than liabilities to pay pensions and benefits after the end of the scheme year, and contain the information specified in the Schedule to the Audited Accounts Regulations;
- Contributions have been paid to the scheme during the scheme year in accordance with the schedule of contributions and with the rules of the scheme and the recommendations of the actuary.
1.6 We have a professional responsibility to report if the financial statements do not comply in any material respect with applicable accounting standards, unless in our opinion the non-compliance is justified in the circumstances. In determining whether or not the departure is justified we consider:
- Whether the departure is required in order that the financial statements give a true and fair view; and
- Whether adequate disclosure has been made concerning the departure.
In addition, under the Audited Accounts Regulations, the financial statements are required to include a statement as to whether they have been prepared in accordance with the Statement of Recommended Practice, ‘Financial Reports of Pension Schemes’, published by the Pensions Research Accountants Group, and if not to indicate where there are any material departures. Failure to comply in this respect will require us to qualify our opinion on whether the financial statements contain the information specified in the Regulations.
1.7 Our professional responsibilities also include:
(a) Including in our report a description of the Trustees’ responsibilities for the financial statements where the financial statements or accompanying information do not include such a description; and
(b) Considering whether other information in documents containing audited financial statements is consistent with and does not undermine the credibility of the audited financial statements. In order to assist us with the examination of your financial statements, we shall request sight of all documents or statements which are due to be issued with the financial statements.
However, our responsibilities in relation to any statements, certificates or reports by the scheme’s actuary, or by other scheme advisers, issued with the financial statements is limited to that of understanding their implications for the scheme’s financial statements.
1.8 We have a duty under Section 70 of the Pensions Act 2004 to report to the Pensions Regulator if we have reasonable cause to believe that there is or has been some failure to comply with any duty relevant to the administration of the scheme imposed by any enactment or rule of law on the trustees or managers, the employer, any professional adviser or any prescribed person acting in connection with the scheme and that the failure to comply is likely to be of material significance in the exercise by the Regulator of any of its functions. We may have to make this report without your knowledge and consent and we cannot undertake to you to fetter this discretion in any manner.
1.9 Section 70 does not require us to undertake work for the sole purpose of identifying breaches likely to be of material significance to the Pensions Regulator. We shall fulfil our duty under this section in accordance with the requirements and guidance set out in ISA 250(B)‘The Auditors’ Right and Duty to Report to Regulators in the Financial Sector’ and Practice Note 15 ‘Pension Schemes in the United Kingdom’. In considering the need to make a report, we may decide to consult the scheme actuary.
1.10 Where audited information is published on the scheme’s website or by other electronic means, it is your responsibility to advise us of any intended electronic publication before it occurs and to ensure that any such publication properly presents the financial information and auditors’ report. We reserve the right to withhold consent to the electronic publication of our report if it or the financial statements are to be published in an inappropriate manner.
1.11 It is your responsibility to ensure that there are controls in place to prevent or detect quickly any changes to that information. We are not required to review such controls nor to carry out ongoing reviews of the information after it is first published. The maintenance and integrity of the scheme’s website is your responsibility and we accept no responsibility for changes made to audited information after it is first posted.
1.12 Our report will be made solely to the Trustees as a body, in accordance with Section 47 of the Pensions Act 1995. Our audit work will be undertaken so that we might state to the scheme’s Trustees those matters we are required to state to them in an audit report and for no other purpose. In the circumstances, to the fullest extent permitted by law, we will not accept or assume responsibility to anyone other than the scheme and the scheme’s Trustees as a body, for our audit work, for the audit report, or for the opinions we form.
1.13 As Trustees you are responsible for notifying us if you become aware that under section 27 of the Pensions Act 1995 any trustee of the scheme is connected with, or is an associate of Ward Williams Limited which would render Ward Williams Limited ineligible to act as auditor to the scheme.
1.14 The trustees of the scheme are responsible for ensuring that there is prepared, maintained and from time to time revised a Schedule of Contributions/Payment Schedule (the Schedule) showing the rates of contributions payable to the scheme by of on behalf of the employer and the active members of the scheme and the dates on or before which such contributions are to be paid.
2 Scope of Audit
2.1 Our audit will be conducted in accordance with the International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board, and will include such tests of transactions and of the existence, ownership and valuation of assets and liabilities, as we consider necessary.
2.2 We shall obtain an understanding of the accounting system and internal control systems in order to assess their adequacy as a basis for the preparation of the financial statements and to establish whether proper accounting records have been maintained by the scheme. We shall expect to obtain such appropriate evidence, as we consider sufficient to enable us to draw reasonable conclusions there from.
2.3 The nature and extent of our procedures will vary according to our assessment of the scheme’s accounting system and, where we wish to place reliance on it, the internal control system, and may cover any aspect of the business operations that we consider appropriate. Our audit is not designed to identify all significant weaknesses in the scheme’s systems but, if such weaknesses come to our notice during the course of our audit which we think should be brought to your attention, we shall report them to you. Any such report may not be provided to third parties without our prior written consent. Such consent will be granted only on the basis that such reports are not prepared with the interests of anyone other than the scheme in mind and that we accept no duty or responsibility to any other party as concerns the reports. However, we are not required to perform tests in connection with or report on:
- The scheme’s long term pension liabilities;
• The trustees’ report, the investment report and any other reports accompanying the financial statements.
2.4 As part of our normal audit procedures, we may request you to provide written confirmation of certain oral representations which we have received from you during the course of the audit on matters having material effect in the financial statements
2.5 In order to assist us with the examination of your financial statements, we shall request sight of all documents or statements which are due to be issued with the financial statements. In forming our opinion, we shall also evaluate the overall adequacy of the presentation of information in the financial statements.
2.6 In order to carry out our duties as scheme auditors, we may need to consult with the scheme actuary or other actuarial adviser appointed by you. You hereby authorise us to communicate directly with such persons for the purposes of performing our duties as scheme auditors.
2.7 The responsibility for safeguarding the assets of the scheme and for the prevention and detection of fraud, error and non-compliance with law or regulations rests with yourselves. However, we shall endeavour to plan our audit so that we have a reasonable expectation of detecting material misstatements in the financial statements or accounting records (including those resulting from fraud, error or non-compliance with law or regulations), but our examination should not be relied upon to disclose all such material misstatements or frauds, errors or instances of non-compliance which may exist.
2.8 We shall not be treated as having notice, for the purposes of our audit responsibilities, of information provided to members of our firm other than those engaged on the audit (for example information provided in connection with accounting, taxation and other services).
2.9 Once we have issued our report we have no further direct responsibility In relation to the financial statements for that financial year.
2.10 Guidance issued by the Pensions Regulator has encouraged voluntary reporting by the trustees and other advisers who have a statutory right to report. If the trustees make a report, or if the trustees are aware of such a report being made by one of their advisers, you agree to provide us with a copy of such a report.
2.11 The trustees of the scheme are responsible for ensuring that there is prepared, maintained and from time-to-time revised, a Schedule of Contributions/Payment Schedule (the Schedule) showing the rates of contributions payable to the scheme by or on behalf of the employer and the active members of the scheme and the dates on or before which such contributions are to be paid. The trustees are also responsible for obtaining a statutory auditor’s statement about contributions.
2.12 As auditors appointed under the Pensions Act 1995 we have and shall have a statutory responsibility to report to the trustees on whether in our opinion the contributions payable to the scheme have been paid, in all material respects, at least in accordance with the Schedule of Contributions/Payment Schedule (‘our Statement’. In arriving at our opinion in our Statement, we shall be required to consider whether we have obtained all the information and explanations which we consider necessary for our work.
2.13 Our work will include examination, on a test basis, of evidence relevant to the amounts of contributions payable to the scheme and the timing of those payments. Our work will not constitute an audit of the scheme and will be performed solely for the purposes of giving the required statement about contributions. We will plan and perform our work so as to obtain all the information and explanations which we consider necessary in order to give reasonable assurance that contributions paid to the scheme under the Schedule have been paid, in all material respects, at least in accordance with that Schedule.
2.14 The Scheme Administration Regulations also require employers and their auditors or actuaries to furnish you on request with such information as is reasonably required for the performance of our duties as scheme auditors and the Regulations require you in turn to disclose such information to us. In this context, we may require written confirmation of certain matters from scheme employers and their auditors.
3 Termination
Our appointment as scheme auditors may only be terminated, by you or by us, by notice in writing. The notice shall state the date with effect from which the appointment terminates. In the case of a notice of resignation given by us, the notice shall contain either:
- A statement specifying any circumstances connected with our resignation which, in our opinion, significantly affects the interests of the members or prospective members of, or beneficiaries under, the scheme; or
- A declaration that we know of no such circumstances.
In the case of a notice of termination given by you, we shall provide you with the aforementioned statement of declaration within 14 days of our receiving the written notice of termination of our appointment. You are required by the scheme administration regulations to provide a copy of the statement or declaration to our successors or proposed successors as scheme auditors