Issue - meetings

Report by the Chief Finance Officer.

6.1       Charlotte Goodrich of KPMG introduced report. She outlined that the External Auditors were giving an unqualified “true and fair” audit opinion on pension fund account. The audit work has included one significant risk on the valuation of hard to price investments (page 8 of the External Auditor’s report), in addition to the risks they are required to assess in all cases. This was due to the areas of judgement involved in valuing these assets. The audit found there were no issues arising from the assessment of this risk.

6.2       Charlotte Goodrich explained that the fraud risk from revenue recognition has been rebutted as there is unlikely to be an incentive for local authorities to fraudulently recognise revenue. The other risk is the fraud risk from the management override of controls. The Auditors found there were no issues arising from these areas of risk and there were no audit adjustments or recommendations.

6.3       The Committee discussed their role in reviewing the External Auditor’s report on the East Sussex Pension Fund. The Committee have an advisory role as part of their oversight of all audit matters. The External Auditor’s report will be presented to the Pension Committee for approval on Monday 16 July 2018.

6.4       The Committee noted that the Pension Fund was a large and mature fund which was close to being fully funded. The Committee asked about the approach being taken to identify what additional investment is needed to fund the Pension Fund’s liabilities. This includes consideration of the level of funding required; the risk of fluctuating markets and measures to ‘de-risk’ the portfolio of investments; and the impact on employers of increased contributions to meet the Pension Fund liabilities. The Head of Accounts and Pensions outlined that these issues will be considered by the Pension Committee as part of the Investment Strategy, and the Pension Committee will be holding an Investment Strategy Review Day after the Pension Committee meeting.

6.5       The Committee did not identify any concerns that they wished to bring to the attention of the Pension Committee, and asked that their comments concerning the Pension Fund Investment Strategy be passed onto the Pension Committee. The Chief Finance Officer agreed to report the Audit Committee’s comments to the Pension Committee for their consideration.

6.6       The Committee RESOLVED to note report and its appendices.