Agenda item

James Lake, Head of Finance – Statutory Accounting and Pension Fund, introduced the item noting that the progress made on the external audit was disappointing as, although many of the outstanding items in the draft audit report had been resolved, there were still some outstanding tasks. It was also highlighted that the Fund’s Annual Report for 2020/21 had been produced containing information on the Fund’s activities over the previous year; the report had been prepared in accordance with CIPFA guidance and aligned with the current regulatory framework. Officers recommended that the Committee approve the draft 2020/21 Annual Report subject to sign off from the external auditors.

Representatives from Ernst and Young apologised that the external auditor report had not been completed and noted that detailed testing had largely been completed with more progress to be made over the next couple of weeks. It was highlighted that as of the date of the meeting, there were no unadjusted or adjusted audit differences which required the Committee’s attention. Ernst & Young were grateful to the officers who had worked with them in delivering the required information promptly and noted that the Pension Fund audit could only be completed once the Council’s audit had been completed. The Committee were briefly taken through the areas of risk identified by the external auditors; it was noted that there were as yet no matters of concern regarding the risk of misstatements due to fraud or error. No findings were reported regarding the risks around the valuation of complex investments and disclosures on going concern, although it was noted that work was ongoing in respect of these.

With regard to the external auditor’s fees, it was clarified that the discrepancy between the audit fees in the report and in the accounts was down to the fees in the report being the external auditor’s suggested fee amount and the fees listed in the accounts were confirmed fees that the Council was already sure of; it was highlighted that the additional fees had not yet been agreed by the PSAA therefore the Council was not in a position to confirm the additional fee amount.

Members queried to what extent income from stock lending impacted the total Pension Fund. It was highlighted that stock lending generated a much lower income as the Council did not currently have any segregated equity assets. With regard to the notes on the Pension Fund Account it was also highlighted that Stockley Academy had changed its name to Aspiration Academy Trust.

By way of clarification, it was noted that with regard to the additional voluntary contributions on page 29 of the agenda, a number of local authorities had experienced difficulties in obtaining the relevant information from the third party to disclose their additional voluntary contributions. It was highlighted that whether or not this information was received, it would not be expected to impact the external auditor’s audit opinion.

The Committee discussed the McCloud ruling with regard to funding arrangements noting that the liabilities were unlikely to be material and there would be a significant amount of work required to quantify what that small amount would be. Officers noted that they were awaiting formal guidance on the appropriate checks required but were able to make it clear that a provision had been made.

The Committee thanked the external auditors and officers present for their contributions.

RESOLVED That the Pensions Committee:

1)    Noted EY’s draft findings on the audit of the Pension Fund accounts for 2020/21; and

2)    Approved the 2020/21 Fund Annual Report for publication.