Scheme Auditors

Auditor Statements

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 regularly.

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. While a significant and growing number of funds have not been able to meet that deadline, draft annual reports and/or accounts have been available for most funds in these cases.

Worsening audit delays being experienced across the local government sector are attributable to a number of different factors, including increasing complexity of regulation (as well as oversight from the Financial Reporting Council), difficulties in the valuation of certain infrastructure assets and also availability and capacity in those audit firms servicing the local government sector.  

On August 3^rd 2022, the SAB Chair Cllr Roger Phillips wrote to the then Local Government Minister, Paul Scully MP, on audit issues within the LGPS. He outlined the issues facing funds as a result of the ongoing delays in completing the audit of main local authority accounts in England. The letter proposed separating pension fund accounts from main local authority accounts as a potential solution to the problem and asked the Minister to task officials to work with the Board and its committees to consider the benefits and risks of such an approach. This would bring the position in England into line with that in Wales and Scotland.

Lee Rowley MP, when Minister for Local Government, responded positively to the Board’s letter, welcoming the Board’s advice and asking his officials to consider the scope for developing this further.

While we were still waiting for progress to be made on that recommendation, later in the year the Board contacted all funds urging them to publish their 2022/23 annual reports based on the best data available to them by the statutory deadline. While ideally annual reports would be based on audited data, that was likely to result in significant delays to publishing. The Board asked funds to produce and publish reports based on unaudited data (labelled as draft), and to re-publish an amended annual report with the external auditor’s opinion and revised data after audit, where necessary.

As of the date of drafting this Scheme Annual Report, the Government has not yet identified a legislative vehicle to effect separation, despite support for this proposal coming from CIPFA, the Institute of Chartered Accountants (England and Wales) and the Levelling Up Select Committee of the House of Commons. In a report published in February 2024 the Select Committee supported separation specifically in recommendation 11. The LGPS pension fund financial audits are the responsibility of three statutory auditing bodies – the Public Sector Audit Appointments Limited (PSAA), the National Audit Office for 78 LGPS funds based in England; and the 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 set up by the Local Government Association) and currently five firms of external auditors (see below) undertake these audits.

England

Wales

England – Public Sector Audit Appointments Limited (PSAA)

Each LGPS fund’s financial accounts are audited separately from each Local Authority’s financial accounts. They are then consolidated into Local Authority financial accounts and ultimately into the financial accounts of DLUHC and HM Treasury as part of the Whole of Government Accounts (WGA).

More information on the Public Sector Audit Appointments Limited (PSAA) - (England) and annual audit letters for each authority may be found on its website.

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 HM Treasury’s Whole of Government Accounts. 

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 DLUHC and HM Treasury.

The Office’s most recently published annual reports on the work completed on local government accounts for the financial year 2022/23 is below:

Local Government Annual Reports – (Wales)

Overall, the Welsh Audit Office report concludes that local government bodies have made further progress in improving the quality and timeliness of their annual financial statements, but that more remains to be done to meet the challenge of earlier reporting deadlines.