Agenda item

This report introduces the final Pension Fund accounts for 2011/12.  The Annual Governance Report is also attached.

The District Auditor, Andrea White will attend the meeting for this item.

Andre White (District Auditor) and Charlotte Goodrich (Audit Manager) from the Audit Commission were present for this item.

The District Auditor informed the Sub-Committee that she had reviewed the financial statements included in the annual report prepared by the Fund and confirmed that they were consistent with the pension fund statements she had audited. She added that the audit of the pension fund accounts was substantially complete and that she planned to issue her audit report including an unqualified opinion on the pension fund statements by 30 September 2012.   She continued that the accounts were completed by the due date and were supported by good supporting working papers and audit trails. Members noted that to reflect the council’s internal efficiency, the fee net amount payable to the audit Commission for its work had been reduced by £2,800 to

£32,200.

Charlotte Goodrich the Audit Manager in outlining the key messages informed members that during the course of the audit she identified two main weaknesses; an internal control weakness over general ledger journals and the concentration of pension fund and investment knowledge.

Controls over journals were found to not be operating effectively throughout the full financial year. Out of a sample of 20 journals tested by Internal Audit during the year, 4 were both prepared and authorised by the same officer which raised the risk that erroneous or unauthorised amounts could be input into the general ledger. As a result, detailed testing on all material year end journals were carried out to obtain sufficient assurance over their validity. Secondly, during the course of her audit it became apparent that the knowledge of the fund and its investments was largely concentrated in one key member of staff, the former Head of Exchequer who had retired. Other pension fund staff lacked sufficient overall knowledge and understanding of the Council’s investments and how they are reflected in the accounts to answer audit queries quickly and efficiently. Consequently, the completion of the audit took longer than anticipated.  In her closing remarks, the Audit Manager stated that despite the internal control issues identified, there were a limited number of errors and queries raised during the course in her audit which reflected a good standard of working papers supporting the accounts and a good working relationship between officers and the audit team for which she would thanked officers for their help and support throughout the audit.

In response to Councillor Hashmi’s enquiry, the District Auditor clarified that her responsibility as the Council’s auditor was to consider whether the Pension Fund had put adequate arrangements in place to satisfy itself that the systems of internal financial control were both adequate and effective in practice and in accordance with Auditing Practices Board’s ethical standards and CIPFA code of practice.  She suggested that in order to address the concentration of pension fund knowledge in one officer, the Council would need to implement systems and processes that would mitigate such risks.

Mick Bowden, Deputy Director of Finance stated that the weaknesses identified by the District Auditor, the preparation of the accounts had not suffered, adding that the retired officer cooperated fully with the audit Commission in their audit prior to his departure.  Anthony Dodridge, Head of Exchequer and Investments added that he linked in with his predecessor prior his departure.

RESOLVED

that the audit of the Pension Fund accounts and the findings of the District Auditor be noted.