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Pension Schemes Manual
Our Pension Schemes Manual provides you with the current and permanent file programmes needed to undertake an audit of a defined benefit, defined contribution pension scheme or hybrid scheme.
The manual also includes:
- an accounts disclosure checklist covering the requirements of the Pensions SORP
- guidance notes that summarise the current legal accounting, auditing and reporting requirements for pension schemes.
This manual is also suitable for an ear-marked pension scheme which does not need to have a true and fair audit but where only a report on the contributions schedule is required.
The documentation included within the Pension Schemes Manual may also be tailored and used on audit exempt assignments.
Our Pension Scheme Manual can be browsed online or sections of content or commentary can be downloaded in Microsoft word or PDF. There is also the flexibility to ‘customise’ a download suitable for your engagement. For every new assignment, you will need to navigate to our website to obtain the most up to date version.
- Guidance notes that provide you with essential background knowledge on the nature of different types of pension scheme and the legal and regulatory framework of the pensions sector. Guidance is also provided on how the auditor should approach the audit of a pension scheme.
- Example engagement letters for statutory and non-statutory audits, earmarked schemes and non-audited schemes. There are also letters of appointment, resignation and an example letter of representation.
- Example auditor's reports and a statement about contributions, along with a statement of trustees' responsibilities.
- Example pro-forma accounts for both defined benefit and defined contribution schemes as well as hybrid schemes.
- A pensions accounts disclosure checklist in accordance with the Pensions SORP and applicable pension schemes regulations.
- Permanent file documentation that provides a structure for your permanent files and outlines the information required which is of continuing importance to an audit assignment over a number of years.
- Pensions specific current file documentation that provides you with the planning, completion and detailed work programmes needed to undertake a defined benefit or defined contribution pension scheme audit. Lead schedules and a current file index are also included, along with a simplified programme for use on earmarked schemes.
September 2023
The principal technical changes in this update include:
- The introduction of a new (optional) statistical sampling approach; and
- The restructuring of the guidance notes.
February 2023
The principal technical changes in this update include the removal of content relating to the now superseded ISQCs and consequential amendments arising as a result of this.
In addition, a number of minor amendments / improvements have been made to other sections of the package, including updating engagement letters to reflect latest guidance.
April 2022
This major update to the manual principally incorporates:
- ISA (UK) 315 (Revised July 2020) Identifying and assessing the risks of material misstatement;
- ISA (UK) 240 (Revised May 2021) The auditor’s responsibilities relating to fraud in an audit of financial statements;
- Consequential amendments as a result of the new quality management standards;
- Amendments to guidance as a result of a number of regulatory and legislative changes, including the release of guidance from PRAG since the last manual update.
December 2021
This update to the manual principally incorporates:
- Amendments as a result of the publication of the FRC Bulletin: Illustrative Auditor's Reports on United Kingdom Private Section Financial Statements (August 2021);
- Best practice amendments from internal review and client feedback.
- Amendments to guidance as a result of a number of regulatory and legislative changes, including the release of guidance from PRAG since the last manual update.
May 2021
This update to the manual principally incorporated:
- Use of audit data analytics - a number of changes have been throughout the manual to encourage teams to consider the use of audit data analytics (ADA) on audit engagements. These changes principally focus on the use of ADA as part of the risk assessment, selection of high risk transactions for testing and stratification of populations to assist with sampling, although teams are encouraged to consider its use in other areas, with revisions to planning forms providing prompts for you to record its planned use. Given the audit quality and efficiency gains which can provided by the use of ADA, a new planning form (B20) has been added for teams to appraise its use on engagements and record why ADA was or was not considered appropriate to use. Where the use of ADA is intended, a number of other revisions have been made throughout the manual to help you record and reflect on the results from its use.
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Reporting on irregularities, including fraud - following the ICAEW publication of 'How to report on irregularities, including fraud, in the auditor’s report - Guide for auditors reporting for the first time' in April 2021 and the comment that 'how the auditor developed their explanation, and the areas considered, would be expected to be documented in the audit file', we have added a new A29 Reporting on irregularities, including fraud in the auditor's report in the Audit Methodology and also an additional test on A21 for the RI to confirm their approval.
March 2021
This update to the manual principally incorporated:
- FRC Ethical Standard 2019 - in December 2019 the FRC issued a revised Ethical Standard. The new standard largely takes effect for audits of financial statements for periods beginning on or after 15 March 2020. This update includes a revision to the ethical forms and guidance notes.
- Brexit - Changes from company law and financial reporting standards have been incorporated where appropriate.
January 2021
This major update to the methodology principally incorporates:
- ISA (UK) 540 (Revised December 2018) – Auditing Accounting Estimates and Related Disclosures - In December 2018 the FRC issued a revised ISA (UK) 540 on Accounting Estimates, to reflect changes made by the IAASB to this standard. The new standard takes effect for audits of financial statements for periods beginning on or after 15 December 2019, although early adoption is permitted.
- ISA (UK) 570 (Revised September 2019) – Going Concern - In September 2019, the FRC issued a revised version of ISA (UK) 570 on Going Concern, which is effective for audits of financial statements commencing on or after 15 December 2019, although early adoption is permitted.
- Changes to the Occupational and Personal Pension Scheme (Disclosure of Information) Regulations 2013 - Changes have been made to these regulations that require additional disclosure the investment report section of a scheme’s annual report concerning the statement of investment principles and a new engagement policy implementation statement. Further related changes affect information that must be published on a website.
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