Agenda item

The purpose of this report is to provide an update on Internal Audit activity since the last report to the Pension Board on 7^th December 2023.

The Head of Audit & Assurance introduced the report to the Board and highlighted the following points from it.

Pensions Payroll Audit

Internal Audit has undertaken a review of the risks and controls related to the Avon Pension Fund - Pensions Payroll and assessed the framework of internal control at Level 4 - Substantial Assurance. A total of 4 audit recommendations are detailed in the Action Plan.

Pension Increases Audit

The Pension Increases (PI) audit was assigned a “Reasonable” Assurance rating.

Overall, there are adequate internal controls within the annual pension increase process to ensure that increases are being paid accurately and timely to pensioners. In terms of the historical issue of pensioners not receiving pension increases, Internal Audit acknowledge that the Quality Assurance team are still progressing 400+ cases and it is expected that all cases should be resolved by the end of December 2024.

Two high risk weaknesses were identified where improvements should be made to current PI controls. Management commitment and support was positive and they agreed to implement all recommendations by April 2025.

APF Scheme of Delegation Audit

The APF Scheme of Delegation audit was assigned a “Reasonable” Assurance rating.

A total of seven medium risk and three low risk recommendations were made for this piece of work. Management engagement was positive and they agreed to implement all recommendations by December 2024.

APF Year-End Process Audit

The APF Year-End Processes was assigned a “Reasonable” Assurance rating and a total of thirteen medium risk and four low risk recommendations were reported.

Staff and management were supportive of the audit findings and that six medium and three low risk recommendations were actioned during the fieldwork, with the remaining eight due for implementation by March 2025.

He added that the planning process will shortly commence for audits in 2025/26 and the Board are asked for their comments on areas for potential inclusion in the 2025/26 Internal Audit Plan.

The Chair commented that he felt that the payroll team had done a phenomenal job and praised their work and the result of the audit.

The Pensions Payroll Manager said that they have taken the comments received during the audit on board and began implementation. She added that there was still work to do within Q1.

Steve Harman asked if there was any update on the 400 Pension Increase cases to be resolved by the end of December 2024.

The Technical & Compliance Advisor replied that this figure had now been reduced to 95 and that these cases had GMP (Guaranteed Minimum Pension) issues.

The Pensions Operations Manager commented that the whole team across the section have done a great job.

Helen Ball asked what the interface was between the process mapping exercise and Internal Audit and whether they matched each other.

The Pensions Operations Manager replied that both were carried out as independent processes. She said that Audit would have been analysing from a deep risk element and that whilst officers were concerned with risk they were working on controls to mitigate risk.

The Head of Pensions said that the audits for 2025 / 26 would be agreed before the end of March 2025.

Helen Ball queried whether there should be a further Pension Increase Audit.

The Head of Audit & Assurance replied that follow up work would take place regarding this audit, but did not consider a full audit to be necessary.

The Head of Pensions said that they would intend to share the 2025 / 26 Audit Plan with the Board at their March meeting.

The Board RESOLVED to note the report and the outcomes of the Internal Audit and External Audit work carried out on behalf of the Avon Pension Fund.