Agenda item

Ms Masci presented the report.

She explained that

·  The responsibilities of external auditors are prescribed by the Local Audit and Accountability Act 2014 and the Code of Audit Practice issued by the National Audit Office.

·  The appointment of auditors to public sector bodies is regulated by Public Sector Audit Appointments Ltd.

·  The Avon Pension Fund accounts are incorporated in their entirety within the accounts of Bath and North East Somerset Council.

·  There are separate audits for the Pension Fund accounts and the Council’s accounts.

She explained that the external auditor is required to give an opinion on whether the annual accounts have been prepared in accordance with proper procedures as defined by CIPFA and international standards, and whether they are full, fair and free of material misstatements. There is also CIPFA guidance about what pension funds should include in their Annual Reports by way of financial and other information. The sole responsibility of the external auditor in relation to the Annual Report is to state whether or not any financial information it contains is consistent with the Accounts. They do, however, study the other information in the Annual Report to see whether it is consistent with their understanding of what was happening in the Fund during the year, and if it was not they would draw attention to that fact. Grant Thornton works for a number of other local authority pension funds, so was in a position to brief funds about what was happening across the sector.

She then commented on the Audit Plan for Avon Pension Fund, attached as Appendix 1 to the report. She drew attention to the statement about materiality on page 8 of the Plan and the information about risks on pages 9-11. She explained that audit fees were sat nationally by Public Sector Audit Appointments Ltd.

A Member asked how pooling would affect the audit of the Fund. Ms Masci explained that the new investment company would have to appoint its own auditors, whose reports would be relevant to the work of the Fund’s auditors. The external auditor already reviewed the reports issued by the auditors of the investment managers used by the Fund in order to understand what controls were in place within those managers. A Member asked about the role of the external auditor in relation to manager and transaction costs. Ms Masci explained that it was not for the external auditor to express a view on the reasonableness of those costs, but merely to ensure that they were recorded accurately.

The Chair summed up by saying that the work of the external auditor was extremely important in relation to the role of Board. However, the terms of appointment of the auditors did not at present require them to assess Funds against CIPFA best practice guidance for the LGPS. He would like to see the audit contracts for LGPS funds stipulate that the auditors must assess whether fund accounts were prepared in accordance with LGPS-specific guidance. This was something he was pursuing at the national level. The National Board did not think this was an urgent issue in the light of their other priorities and the fact that for the last three years audits had not raised any material issues for any of the 89 LGPS funds.

RESOLVED to note the Audit Plan for the financial year ended 31 March 2016.