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50.1.      The Board considered a report about an Internal Audit report on Pension Fund Governance and Investments.

50.2.      Nigel Chilcott (NC), Senior Audit Manager, explained that the Internal Audit Strategy 2017/18 and Annual Plan included planned audits of the ESPF in relation to Pensions Governance, Investments and External Control Assurance; and Pension Fund Process and Systems. Audits of these areas are carried out on an annual basis.

50.3.      NC said that internal audits of the ESPF had not previously gone to the Pension Board as a matter of course. Quarterly internal audit progress reports, however, are reported to both Corporate Management Team and the Audit, Best Value & Community Services Scrutiny Committee (ABVCS). The ABVCS and Cabinet also endorse each iteration of the Internal Audit Strategy and Annual Plan.

50.4.      The Chair said he believed that the Pension Board should receive all internal audit reports on matters relating to the ESPF and be a consultee of the Internal Audit Strategy and Annual Plan. Ian Gutsell (IG), Chief Finance Officer, agreed that the Pension Board would be a consultee for future Internal Audit Strategies because of its role in scrutinising the performance of the ESPF.

50.5.      SM asked to what extent the Internal Audit team can be sure that its recommendations will be implemented. NL responded that relevant officers are required to implement all three of the agreed actions. These actions will have been agreed in consultation with management and so are all achievable.

50.6.      The Chair questioned whether all staff would necessary be able to identify what constituted a breach in order to then report one. NL said that making everyone in the pension administration team aware of what constituted a breach is part of the agreed actions around reporting breaches. He added that the agreed actions relating to collaborative working between teams – in order to address the risk of missing statutory deadlines – should also go some way to alleviating instances of breaches, as these missed deadlines are often the cause of breaches.

50.7.      The Chair observed that the Pension Regulator has advised that if Pension Boards ignore breaches then they can be fined. There should, therefore, be a clear understanding of what constitutes a breach and a clear chain of command that the breaches are reported to that result in the Pension Board being informed. NC confirmed that it is the responsibility of the pension administration team to report breaches and that procedures are in place to ensure that individuals within the team do.

50.8.      The Board RESOLVED to:

1) note the report;

2) request that the draft Internal Audit Strategy 2018/19 and Annual Plan be circulated to the Board for comment;

3) request that previous Internal Audit reports on areas relating to the ESPF be circulated by email;

4) request a report at its next meeting on the recent Internal Audit report on Pension Fund Processes and Systems; and

5) request that future internal audit reports and that future versions of the Internal Audit Strategy are considered at Board meetings.