Pension scheme auditors and trustees face are facing additional scheme reporting challenges as a result of COVID-19. This has led to the publication of a new guide, applying to DB and DC pension schemes, from a joint working party.
Representatives from ICAS, ICAEW and PRAG have produced ‘Pension scheme reports and financial statements, and related matters in the context of the COVID-19 pandemic’. The guide can be downloaded on the ICAS Website.
The joint working party makes it clear from the outset of the guide that there are no changes to the requirements for preparing and auditing pension scheme financial statements. Annual reports and accounts for pension schemes still need to be produced within seven months of the scheme year end.
However, as ‘business as usual has been disrupted’ by the pandemic, they recommend that trustees and auditors check The Pension Regulator’s website regularly for any updates relating to pension scheme annual reports.
The guide also recommends that ‘in view of the COVID-19 pandemic, trustees need to consider whether the going concern basis remains appropriate’. And trustees should make allowances for additional complexities when producing reports, financial statements, and chair statements.
Auditors will need to consider the impact of COVID-19 on all aspects of the audit and discuss these with trustees, where appropriate. In particular, when compiling the statement about contributions, auditors will need to determine to what extent, if any, contributions to the scheme have been affected by:
- the reduction or suspension of deficit recovery contributions or future contributions;
- changes in pensionable earnings, and
- the furloughing of employees.
Overall, the joint working party has produced useful guidance for trustees to take into account when discussing scheme reporting during COVID-19 with their auditors. Trustees should also consider what additional messages they might need to include on member communications, such as annual benefit statements.