PENSIONS COMMITTEE
TUESDAY 27TH SEPTEMBER 2011 AT 10AM
AUDIT COMMITTEE
THURSDAY 29th SEPTEMBER 2011 AT 10AM / Agenda Item No:
2
RESPONSE TO AUDIT COMMISSION ANNUAL GOVERNANCE REPORT
Report of the Director Resources and Performance
Author of the report: Patrick Towey (Telephone: 01992 555148)
1. Purpose of the Report
1.1 To provide the Committee with a recommended response to the Audit Commission’s Annual Governance Report presented to this meeting.
2. Response to the Annual Governance Report
2.1 The Audit Commission has issued a separate Annual Governance Report for the Pension Fund following the audit of the 2010/11 annual report and accounts. The Audit Commission has made one recommendation in their report and the initial officer response to this recommendation is set out in paragraph 2.2. Following this meeting officers will work with the Audit Commission to complete the action plan in Appendix 4 of the Audit Commission’s report.
2.2 R1 – Perform regular reconciliations between the general ledger and the pensions’ administration system for lump sum benefits paid and investigate and correct any identified differences.
It is acknowledged that whilst no errors in terms of lump sum payments to individuals or the fund were identified during the audit that regular reconciliations are required.
Council officers have obtained assurance from the Director of Pensions at the London Pensions Fund Authority (LPFA) that any differences between the general ledger and the pension’s administration system will be fully reconciled and that a quarterly check of data will be undertaken. Any errors will therefore be identified and corrected on an ongoing basis to ensure a minimum number of queries will need resolving at year end.
3. Letter of Representation
3.1 Paragraph 20 on page 9 of the Audit Commission’s report sets out the requirement for a letter of representation and Appendix 2 of their report is the formal request from the auditors for it. As noted in the Audit Commission’s request, this is to be signed by the Chairmen of the Pension and Audit Committees and the Chief Finance Officer. A draft is attached at Appendix A to this report for members to review. The final letter must then be signed within 14 days of the District Auditor issuing his opinion on the accounts.
Appendix A
Mr. M. Hodgson Hertfordshire County Council
District Auditor County Hall
Audit Commission Hertford SG13 8DP
Regus House
1010 Cambourne Business Park Fax : 01992 555505
Cambourne Telephone : 01992 555601
Cambridge E-mail :
CB23 6DP Minicom : 01992 556611
Contact : Mike Parsons
My Ref :
Your Ref :
Date : 27 September 2011
Dear Mr. Hodgson
Hertfordshire County Council – Pension Fund Audit for the year ended 31 March 2011
I am writing further to the letter provided to us at the beginning of your audit of the Pension Fund accounts. I confirm to the best of my knowledge and belief, having made appropriate enquiries of officers of Hertfordshire County Council, the following representations in connection with your audit of the Council’s Pension Fund financial statements for the year ended 31 March 2011.
Compliance with the statutory authorities
I acknowledge my responsibility under the relevant statutory authorities for preparing the financial statements in accordance with the Code of Practice for Local Authority Accounting in the United Kingdom and the Financial Reports of Pensions Schemes – A Statement of Recommended Practice which give a true and fair view of the financial position and financial performance of the Pension Fund and for making accurate representations to you.
Uncorrected misstatements
I confirm that the effects of any uncorrected financial statements misstatements (to be listed in the annual governance report) are not material to the financial statements, either individually or in aggregate and that these misstatements have been discussed with those charged with governance.
Supporting records
I confirm that all the accounting records, other records and related information, including minutes of all Council and Committee meetings have been made available to you for the purpose of your audit and all the transactions undertaken by the Pension Fund have been properly reflected and recorded in the accounting records
Irregularities
I acknowledge my responsibility for the design and implementation of internal control systems to prevent and detect fraud or error.
There have been no:
· irregularities involving management or employees who have significant roles in the system of internal accounting control;
· irregularities involving other employees that could have a material effect on the financial statements; or
· communications from regulatory agencies concerning non-compliance with or deficiencies on, financial reporting practices which could have a material effect on the financial statements.
I also confirm that I have disclosed:
· my knowledge of fraud, or suspected fraud, involving either management, employees who have significant roles in internal control or others where fraud could have a material effect on the financial statements;
· my knowledge of any allegations of fraud, or suspected fraud, affecting the Pension Fund’s financial statements communicated by employees, former employees, analysts, regulators or others; and
· the results of my assessment of the risk that the financial statements may be materially misstated as a result of fraud.
Law, regulations, contractual arrangements and codes of practice
There are no instances of non-compliance with laws, regulations and codes of practice, likely to have a significant effect on the finances or operations of the Council’s Pension Fund.
The Council has complied with all aspects of contractual arrangements that could have a material effect on the Pension Fund financial statements in the event of non-compliance. There has been no non-compliance with requirements of regulatory authorities that could have a material effect on the financial statements in the event of non-compliance.
I confirm that there are no actual or possible litigation and claims, whose effects should be considered when preparing the financial statements, to be disclosed to you and accounted for and disclosed in accordance with the applicable financial reporting framework.
Accounting estimates including fair values
The investment assets of the Pension Fund have been properly recorded and, valued at market value at close of business on 31st March 2011, where a quoted price is available. The best available information has been used to value the remaining assets, as detailed in the financial statements.
Given this approach, I can confirm that the significant assumptions within the financial statements covering investments are reasonable. Specifically in relation to:
· the appropriateness of the measurement method used;
· the basis used by management to overcome the presumption under the financial reporting framework; and
· the completeness and appropriateness of the disclosures in terms of the requirements of the financial reporting framework.
I can also confirm that no events subsequently require any adjustment to the fair value measurement.
Contingent liabilities
There are no other contingent liabilities, other than those that have been properly recorded and disclosed in the financial statements. In particular:
· there is no significant pending or threatened litigation;
· there are no material commitments or contractual issues, other than the commitments to private equity limited partnerships disclosed in the financial statements; and
· no financial guarantees have been given to third parties.
Related party transactions
I confirm the completeness of the information disclosed regarding the identification of related parties. The identity of, and balances and transactions with, related parties have been properly recorded and where appropriate, adequately disclosed in the financial statements.
Post balance sheet events
Since the balance sheet date no additional significant post balance sheet events have occurred which would require adjustment or disclosure in the financial statements.
I can confirm that the Pension Fund has no plans or intentions that may materially alter the carrying value or classification of assets and liabilities reflected in the financial statements.
I confirm that this letter has been discussed and agreed by the Pensions Committee on 27th September 2011 and the Audit Committee on 29th September 2011.
Signed on behalf of Hertfordshire County Council in respect of the Pension Fund
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Mike Parsons
Director of Resources and Performance
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Councillor David Lloyd Councillor Seamus Quilty
Chairman of the Pensions Committee Chairman of the Audit Committee