Industry bodies publish joint Covid-19 pension audit guidance

Industry bodies have published joint guidance on the implications of Covid-19 for pension scheme financial reports and audits.

The guide represents the joint efforts of the Institute of Chartered Accountants Scotland (ICAS), the Institute of Chartered Accountants in England and Wales (ICAEW), and the Pensions Research Accountants Group (PRAG).

It is relevant to both private sector occupational defined benefit and defined constitution schemes, including master trusts and hybrid schemes.

The guide covers a range of issues, including trustee responsibilities for reporting to The Pensions Regulator (TPR), going concern and trustees’ assessments of this, and audit issues.

It emphasised that while uncertainties and unprecedented risks posed by the pandemic are still ongoing, the practical challenges that have also occurred could mean that schemes will need to allow additional time to finalise their annual reports in line with statutory deadlines.

Commenting on the guidance, ICAS head of charities and pensions, Christine Scott, added: “The impact of coronavirus means it can’t be business as usual for pensions schemes and their auditors.

“As well as referring to our guide, pension schemes and their auditors should continue to apply existing standards and guidance and keep up to date with new Covid-19 related announcements and guidance from the Financial Reporting Council (FRC) and TPR.”

The guidance warned that trustees may take longer to complete going concern assessments, also noting that audit firms may be introducing “strengthened risk management and quality control arrangements” for the signing of auditor’s reports, both of which could see further delays to scheme reporting.

It has also stressed the “vital” need for auditors to maintain audit quality both in the conduct of their work and in judgements they make about evidence, highlighting professional judgement and scepticism as “key”.

Also commenting on recent Covid-19 updates from TPR, the guide highlighted that it is “not clear” if potential fines for non-compliant chair’s statements will be avoided or just delayed.

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