Agenda item

The Committee had before it a report by External Audit which set out the North East Scotland Pension Fund Annual Audit Plan 2021/22.  The report highlighted key audit risks and the planned audit work in respect of these, and set out the 2021/22 reporting arrangements to the Committee.

The Committee heard from Ms Gillian Woolman, External Audit, on the main points from the report. 

It was noted that the effects of COVID-19 were likely to be felt for some time into the future, and the Auditor General for Scotland, the Accounts Commission and Audit Scotland continued to assess the risks to public services and finances from COVID-19 across the full range of audit work, including annual audits and the programme of performance audits.  It was therefore noted that changes in approach might be necessary, and where this impacted on annual audits, revisions to the Annual Audit Plan might be required.

The following risks were highlighted to be taken forward as part of the annual audit plan:-

·       actuarial valuation of future retirement benefits. Actuarial valuation depended on a number of assumptions about the future.  These included investment returns, contribution rates, commutation assumptions, pensioner mortality, discount rates and earning assumptions.  As a result a ‘review of the work of an expert’ would be carried out in accordance with ISA 500, for the work of the actuary and review actuarial assumptions, and would consider the report by Audit Scotland’s consulting actuary on the actuarial valuations;

·       valuation of unquoted investments. There was a significant degree of subjectivity in the measurement and classification of certain investments.  As a result a ‘review of the work of an expert’ would be carried out in accordance with ISA 500, and would confirm valuations to valuation reports and/ or other supporting documentation for significant unquoted investments; and

·       actuarial valuation of the Transport Fund insurance buy-in contract.  The valuation depended on a number of assumptions about the future.  Thesed include investment returns, contribution rates, commutation assumptions, pensioner mortality, discount rates and earning assumptions.  There would therefore be a ‘review of the work of an expert’ undertaken in accordance with ISA 500, for the work of the actuary and review actuarial assumptions.

The report further advised that there was a risk around possible changes to the composition of the Pension Committee and the Pension Board as a result of the local government elections in May 2022, and new members not having the necessary experience and understanding of their role and responsibilities in such areas as governance, scrutiny and decision making in respect of the Pension Fund.  This was to be mitigated with training for Members in June, ahead of the first meeting of the Pensions Committee and Board, and the report advised that the Council's arrangements for developing members and preparations for inducting newly elected members would be monitored.

The Committee resolved:-

(i)       to thank Ms Woolman for her presentation of the report; and

(ii)       to note the annual audit plan.

The Board resolved:-

to note the decision of the Committee.