What Trustees Can Expect from Auditors Under New Pension Scheme Guidelines
Accounting firm Deloitte has said trustees need to consider a dialogue with pension administrators and statutory auditors following the release of a pension scheme guidance from The Pensions Regulatory (TPR) that aims to improve record-keeping and internal controls.
The guidelines, which have been issued in June 2010 and has since gained the support of the Institute of Chartered Accountants in England and Wales (ICAEW), provide a clear-cut description of what services pension scheme auditors need to deliver to trustees.
Sue Barratt, head of the UK pension audit leadership team at Deloitte, said trustees need to take note of the importance of the dialogue with administrators and auditors “to understand exactly what work has been performed” with regards to pension scheme records.
“This is so trustees can determine, in anticipation of regulatory scrutiny or members’ questions, whether any further work is required and if so, who should perform that work,” Barratt added.
The Pensions Regulatory has reported that nearly 20 percent of trustees never meet with their administrator, causing a lack of pension scheme data monitoring.
Even if trustees can delegate the task of running their pension scheme to administrators on a daily basis, they are still responsible for any problems arising from the lack of oversight on their scheme, said June Mulroy, TPR executive director for DC, governance and administration issues.
However, Barratt told auditors to avoid being “complacent” that trustees will free them of any liabilities with respect to the pension scheme record, saying trustees “will expect more than just a ‘vanilla’ audit.”
“The ability of auditors to demonstrate how they have added value to trustees, such as through providing insights into their systems and benchmarking these against those of other schemes, will be a key differentiator between audit firms,” Barratt said.
The new pension scheme guidelines still obey the auditing standards of the Accounting Practices Board, the Practice Note 15 of which has been revised by the APB last month to include the issuance of the International Standards on Accounting.
“At the same time, The Accounting Standards Board is consulting on the future of the financial reporting framework applicable to pension scheme; their current proposals recommend that pension schemes are deemed “publicly accountable” and will have to comply with full IFRS,” Barratt added.