Agenda item

This report presents the indicative draft London Borough of Brent Pension Fund External Audit Plan 2023-24.

The Chair welcomed Samantha Morgan to the meeting (representing Grant Thornton as Audit Manager following apologies submitted by Matt Dean – Key Pension Audit Partner) and invited her to introduce the External Audit Plan providing an overview on the planned scope and timing for the 2023-24 Brent Pension Fund audit process.

In presenting the report apologies the following key areas were highlighted:

·             The key matters identified in terms of both the national and local context relating to the present challenges faced by Pension Funds in terms of the impact of inflationary pressures and wider geo-political issues on global investment markets and revised investment strategy guidance.

·             The scope and timescale of the planned audit and outline provided of the significant risks identified (along with the reasons and key aspects of the proposed response) which included (in line with previous years) management of override controls, valuation of Level 3 investments and the revenue cycle including fraudulent transactions (rebutted).

·             The approach identified towards materiality, which at the planning stage of the audit had been set at £18.6m for the Pension Fund (equating to 1.5% of the gross investment assets) and £5.9m for the Fund Account (equating to 10% of the prior year gross expenditure).  The Committee were reminded that external audit would be obliged to report uncorrected omissions or misstatements other than those which had been identified as “clearly trivial” with that level set at £0.93m.  Whilst these levels were the same as 2023-24 the assessment of materiality would be kept under review throughout the audit process with the Committee advised of any adjustments, should they be required.

·             The response and progress identified against prior year audit findings and recommendations, with it noted that progress in terms of the management response against four of the seven recommendations were due to be finalised and confirmed within the Plan as part of the final year end audit.

·             The outline of the approach to be adopted in relation to the IT audit strategy.

·             The background to the audit fees which, whilst having increased from £55,771to £94,414 for the 2023-24 financial year (including an additional £7,530 for the ISA 315 work), it was noted had been determined in accordance with the scale of fees specified within the current PSAA contract.

·             The planned approach identified towards meeting the revised requirements in relation to ISA315 in relation to the Pension Fund Audit.

·             The assurance provided in relation to the independence of the auditor and audit services.

Having introduced the report the Committee was then invited to raise any comments/questions, which are summarised below:

·             Following concerns expressed in response to the increase in audit fees, members highlighted what they felt was a need to ensure that the level of external audit fees and any additional charges incurred, or further increase in fees was kept under review.  In recognising the concerns expressed, the Chair advised these had been raised but also felt it was important to recognise that the initial scale of fees had been set through the PSAA as part of the national procurement process with the External Audit contract having been retendered in 2023 leading to Grant Thornton being reappointed as Brent’s auditor.  Samantha Morgan also highlighted how the scale of fees had been developed to reflect the current basis of costs incurred in resourcing and undertaking the necessary standard of audit work which also reflected the introduction of enhanced accounting and auditing standards and with any variation in fee determined by PSAA in accordance with set procedures.  In recognising the concerns expressed Minesh Patel (Corporate Director Finance & Resources)  reassured members of the work undertaken with Grant Thornton to support the audit process and minimise any additional work required outside of the scope of the initial audit fee, but in recognising the concerns raised advised that officers would continue to ensure that the level of fees and any additional charges or increases were kept under ongoing review.

As no further issues were raised the Chair thanked Samantha Morgan for the update provided and it was RESOLVED to note the content of the Draft Pension Fund Audit Plan 2023-24.