It is important that the Government, LGPS members, employers and stakeholders have confidence in the overall financial management of the scheme.
Under the LGPS regulations each of the LGPS administering authorities are required to publish an annual report. Each LGPS fund is subject to an annual statutory external audit of its financial statements that must be prepared in accordance with the LGPS regulations and CIPFA guidance that is updated annually.
The Scheme Advisory Board is keen that all LGPS funds publish their statutory annual report and audited financial statements by 30th September and at the latest by 1st December each year. The latter was largely achieved in 2015 other than by a small number of funds whose reports were not published until after the deadline.
The LGPS pension fund financial audits are the responsibility of three statutory auditing bodies – the Public Sector Audit Appointments Limited (PSAA) (the Audit Commission up to 31st March 2014) and National Audit office for 83 LGPS funds based in England; and Welsh Audit Office for 8 LGPS funds based in Wales. They are required to give assurance (or otherwise) that the financial statements show a true and fair view of the fund income and expenditure and of the amount and disposition of the fund assets and liabilities.
From 1st April 2015 the responsibility for appointing Local Authority auditors passed to PSAA (a limited company being set up by the Local Government Association) and currently five firms of external auditors (see below) undertake these audits.
|National Audit Office
|Ernst & Young
|Welsh Audit Office
England - Public Sector Audit Appointments Limited (PSAA)
Each LGPS funds' financial accounts are audited separately from each Local Authority financial accounts. They are then consolidated into Local Authority financial accounts and ultimately into the financial accounts of DCLG and HMT.
More information on the Public Sector Audit Appointments Limited (PSAA) - (England) and annual audit letters for each authority may be found on its website.
In its 2014 Report, the Audit Commission National Fraud Initiative estimated for the LGPS it detected and prevented pension fraud, overpayment and error amounting to £1.4m. Responsibility for the NFI moved to Cabinet Office in 2015.
England - National Audit Office
The National Audit office is responsible for the financial audit of the Environment Agency financial accounts and the financial accounts of its two LGPS pension funds (Closed and Active funds). Both are consolidated into the financial accounts of DEFRA and ultimately HMT. The annual reports and audited financial statements of the Closed and Active Funds were published and laid in Parliament. Both sets of accounts were unqualified.
Wales - Welsh Audit Office
The Wales Audit Office is responsible for the audit of all local government bodies (including pension fund authorities) in Wales. They are then consolidated into Local Authority financial accounts and ultimately into the financial accounts of DCLG and HMT.
The Office’s most recently published annual report on the work completed on local government accounts for the financial year 2014/15 is below:
Overall the Welsh Audit Office report highlights that despite all accounts being prepared and audited to the statutory deadlines, the number of bodies where the accounts had to be amended for material items increased once again this year. Auditors also reported concerns to a few bodies about the standard of working papers and information to support accounts. For seven audited bodies (including two pension funds because the audit is associated with the administering authority), the certificate concluding the audit had not been given at the time the opinion was issued. This was mainly because issues relating to electors’ questions and objections remained outstanding.