Pensions Regulator tackles audit “expectation gap”
The Pensions Regulator this month issued guidance telling trustees what they can expect their auditor to check.
Designed to reduce the “expectation gap”, the regulator’s audit guidance (PDF) emphasises that trustees should not assume the auditor will test the quality and accuracy of their member data or the controls around that data.
The guide appears to be the result of consultations between the regulator and professional representatives following publication of a June 2010 guide on improving internal controls and record-keeping.
Clarifying their position, the regulator’s new guide explains: “Auditors are not required to do any more than is required under the Auditing Practices Board’s auditing standards and Practice Note15 to fulfil their statutory responsibilities.
“Statutory auditors will not necessarily carry out tests to assess member records unless they judge the condition of those records to create a significant risk of material misstatement in the accounts. Auditors will also only consider the control environment to the extent it could impact on the financial transactions reported in the accounts.”
However if the auditor comes across record-keeping errors of sufficient importance to bring to attention of trustees, they would report them to trustees at the conclusion of the audit.
The Accounting Standards Board is consulting on the future of the financial reporting framework applicable to pension schemes; their current proposals recommend that pension schemes are deemed “publicly accountable” and will have to comply with full IFRS. Deloitte is currently running anonline survey
to establish what trustees, administrators, actuaries and accountants think of the ASB’s pensions standard exposure draft.