audit  2002/2003

Pension Fund opinion audit - communication to those charged with governance
Oxfordshire County Council
INSIDE THIS REPORT
PAGES 2-6
Summary Report
•	Introduction
•	Background
•	Auditor’s report
•	Unadjusted misstatements
•	Material weaknesses in accounting and internal control systems
•	Qualitative aspects of accounting practices and financial reporting
•	Matters required by other auditing standards to be reported 
•	Other matters
•	Next steps
•	Independence and objectivity
PAGES 7-17
Appendix 1
•	Draft auditor’s report
Appendix 2
•	The Audit Commission’s requirements on independence and objectivity
Appendix 3
•	Analysis of errors and omissions
Appendix 4
•	Additional disclosures required
Appendix 5
•	Opinion Audit – matters arising
ANNEX 2

Introduction
The Council, as administering authority for the Pension Fund, is responsible for the preparation of financial statements that present fairly the financial transactions of its pension scheme for the year ended 31 March 2003 and the disposition of its assets and liabilities at that date other than liabilities to pay pensions and benefits after the end of the scheme year. We are responsible for undertaking an audit and reporting whether in our opinion the financial statements do present fairly the financial transactions, assets and liabilities of the Pension Fund other than liabilities to pay pensions and benefits after the end of the scheme year.
The Council is responsible for the preparation of a Statement of Internal Control in accordance with the provisions of the Code of Practice on Local Authority Accounting in the United Kingdom: a Statement of Recommended Practice. We are required to report where we become aware in the course of our audit of inconsistencies with the disclosures made by the Council.
The Council submitted draft financial statements to us on 31 July 2003 and we have now substantially completed our audit of those statements. This report details key matters arising from our audit that we must communicate to those charged with governance prior to giving an opinion on those financial statements. SAS 610.3 requires auditors to communicate to those charged with governance, at least annually, all relationships that may bear on the firm’s independence and the objectivity of the audit engagement partner and audit staff. Further Audit Commission requirements are set out in Appendix 2 to this letter.
It should be noted that our audit does not seek either to obtain absolute assurance that the financial statements present fairly your financial position or assurance that they are accurate in every regard. In this context, we adopt a concept of materiality. We seek, in planning and conducting our audit of the accounts, to identify material errors in your financial statements. Material errors are those which might be misleading to a reader of the financial statements. Our calculation of overall materiality is £857,000 for the financial statements of the Pension Fund. However, we may determine that certain items of account may be subject to a lower materiality level due to their political or numerical sensitivity. 
We can also confirm that we are not aware of any relationships that may bear on the independence of the audit team and so require disclosure. 
Background
A revised Statement of Auditing Standards (SAS), SAS 610 Reporting to those charged with governance, is applicable for the first time to the audit of the Council’s accounts. It requires auditors to report to those charged with governance (as distinct from management) certain matters before they give an opinion on the financial statements:
•	expected modifications to the auditors' report;
•	unadjusted misstatements;
•	material weaknesses in the accounting and internal control systems identified during the audit;
•	their views about the qualitative aspects of the entity's accounting practices and financial reporting;
•	matters specifically required by other Auditing Standards to be communicated to those charged with governance; and
•	any other relevant matters relating to the audit. 
We agreed with the Council that the communications required by SAS 610 in advance of issuing our report on the annual financial statements of the Council would be with the Pension Fund Committee.
We have considered each of the areas listed above and our views are set out below together in this first year with explanations of the issues that we are responding to.
Auditor’s report
The standard requires that we report to those charged with governance any proposed modifications to our report on the financial statements. On the basis of our audit work we do not currently intend to issue a non-standard report on the Council’s financial statements. A draft report is attached at Appendix 1.
Unadjusted misstatements
We are required to report to you all misstatements other than those of a clearly trifling nature. A trifling error is an entirely inconsequential error, whether taken individually or in aggregate and whether judged by any quantitative and/or qualitative criteria.
We have not identified any non-trifling errors in the course of our audit.
Material weaknesses in accounting and internal control systems
We have limited responsibilities to report to you weaknesses in accounting systems and systems of internal control identified in the course of our audit. SAS 610 provides:
•	a material weakness in the accounting and internal control systems is a deficiency in design or operation which could adversely affect the entity's ability to record, process, summarise and report financial and other relevant data so as to result in a material misstatement in the financial statements. Auditors normally do not need to communicate information concerning a material weakness of which those charged with governance are aware and in respect of which, in the view of the auditors, appropriate corrective action has been taken, unless the weakness is symptomatic of broader weaknesses in the overall control environment and there is a risk that other material weaknesses may occur. Material weaknesses of which the auditors are aware are communicated where they have been corrected by management without the knowledge of those charged with governance.
We have a duty to report adjusted errors in financial statements where they are relevant to your wider governance responsibilities. 
Our audit identified the following weaknesses in systems of accounting and financial control: 
•	There is a difference in the disclosure of the membership numbers relating to contributory employees in the authorities’ statement of accounts (14,302) and the Annual Report and Accounts (14,858). The difference of 556 is nearly 4% of the membership figure in the accounts. The pension interface is not working so an estimate was made of employees who have joined the scheme since the introduction of SAP. Also, there were delays in authorities returning annual returns so membership numbers at 31 March are overstated (before the reconciliation process has been completed, i.e. before adjusting for employees who have decided not to enter the scheme; thus accurate membership details are not included in the annual statement of accounts). The authority has intimated that the 14,302 figure is used as this is nearer the actual membership numbers. 
•	the pension fund set budgets for 2002/03 for investment management and scheme administration costs. However no reporting was made to members during 2002/03 in respect of comparisons between budgets and actual.
You should be aware that we do not provide a comprehensive statement of all weaknesses that may exist in the accounting and internal control systems or of all improvements that may be made, but have addressed only those matters that have come to our attention as a result of the audit procedures performed.
Qualitative aspects of accounting practices and financial reporting
SAS 610 places specific duties on auditors to report their assessment of qualitative aspects of accounting practices and financial reporting to those charged with governance:
In the course of their audit of the financial statements, auditors consider the qualitative aspects of the financial reporting process, including items that have a significant impact on the relevance, reliability, comparability, understandability and materiality of the information provided by the financial statements. Auditors discuss in an open and frank manner with those charged with governance the auditors' views on the quality and acceptability of the entity's accounting practices and financial reporting. Such discussions may include:
•	the appropriateness of the accounting policies to the particular circumstances of the entity, judged against the objectives of relevance, reliability, comparability and understandability but having regard also to the need to balance the different objectives and the need to balance the cost of providing information with the likely benefit to users of the entity's financial statements;
•	auditors explain to those charged with governance why they consider any accounting policy not to be the most appropriate, and request those charged with governance to make appropriate changes. If those charged with governance decline to make the changes on the grounds that the effect is not material, the auditors inform them that they will consider qualifying the auditors' report as soon as the effect of not using the most appropriate policy can reasonably be expected to influence the economic decisions of users of the financial statements.
•	the timing of transactions and the period in which they are recorded;
•	the appropriateness of accounting estimates and judgments, for example in relation to provisions, including the consistency of assumptions and degree of prudence reflected in the recorded amounts;
•	the potential effect on the financial statements of any uncertainties including significant risks and exposures, such as pending litigation, that are required to be disclosed in the financial statements;
•	material uncertainties related to events and conditions that may cast significant doubt on the entity's ability to continue as a going concern;
•	the extent to which the financial statements are affected by any unusual transactions including non-recurring profits and losses recognised during the period and the extent to which such transactions are separately disclosed in the financial statements;
•	apparent misstatements in the other information in the document containing the audited financial statements or material inconsistencies between it and the audited financial statements;
•	the overall balance and clarity of the information contained in the annual report;
•	disagreements about matters that, individually or in aggregate, could be significant to the entity's financial statements or the auditors' report. These communications include consideration of whether the matters have, or have not, been resolved and the significance of the matters.
The matters which have come to our attention that we would wish to raise with you are listed in Appendix 4.
Management has asserted that the adoption of these policies does not have a material effect on the financial statements of the Council. Should this situation change in the future we would consider qualifying our audit opinion on grounds of disagreement about accounting treatment.
Matters required by other auditing standards to be reported to those charged with governance
Other auditing standards require us to communicate with you in other specific circumstances including:
•	where we suspect or detect fraud, even if the potential effect is not material to our audit of the financial statements
•	in respect of the conclusion that the Council is a going concern
•	where there is an inconsistency between the Council’s financial statements and other information in documents containing the financial statements. 
We have identified no such matters in the course of our audit.
Other matters
There are no other matters that we wish to draw to your attention.
Next steps
You need to determine whether to adjust the financial statements of the Council in respect of the misstatements and/or the qualitative aspects of financial reporting identified above.
Should you chose not to do so, we are required by SAS 610 to request from you a letter of representation explaining why you are not going to adjust the financial statements. We ask that the letter specifically details the misstatements and/or qualitative aspects of reporting to which it relates, either in the body of the letter or in a document appended to it.
Independence and objectivity
Under the requirements of the Statement of Auditing Standards (SAS) 610, we are not aware of any relationships that may bear on the independence and objectivity of the team which are required to be disclosed. 
In relation to the audit of your financial statements we will comply with the Commission’s requirements in respect of independence and objectivity as set out at Appendix 2.

Status of this report to the Council
This report is prepared in the context of the Statement of Responsibilities of Auditors and Audited Bodies issued by the Audit Commission. It is prepared by appointed auditors and addressed to Members of the Council. It is prepared for the sole use of the audited body, and no responsibility is taken by auditors to any Director or officer in their individual capacity, or to any third party.	

APPENDIX 1
Auditor’s report (as set out in Audit Commission TB 12/2003)
Independent Auditor’s Report to Oxfordshire County Council
I have audited the financial statements of the Pension Fund accounts on pages A to F which have been prepared in accordance with the accounting policies applicable to local authorities and in accordance with the accounting policies applicable to pension funds as set out on pages X to Y.
This report is made solely to Oxfordshire County Council in accordance with Part II of the Audit Commission Act 1998 and for no other purpose, as set out in paragraph 54 of the Statement of Responsibilities of Auditors and of Audited Bodies, prepared by the Audit Commission.
Respective Responsibilities of the Chief Financial Officer and Auditor
The Chief Financial Officer is responsible for the preparation of the financial statements in accordance with the Statement of Recommended Practice on Local Authority Accounting in the United Kingdom 2002. My responsibilities, as independent auditor, are established by statute, the Code of Audit Practice issued by the Audit Commission and my profession’s ethical guidance.
I report to you my opinion as to whether the financial statements present fairly:
•	the financial position of the Council and its income and expenditure for the year,
•	the financial transactions of its Pension Fund during the year and the amount and disposition of the Fund’s assets and liabilities, other than liabilities to pay pensions and benefits after the end of the scheme year.
I review whether the statement on page x reflects compliance with the requirements of the Statement of Recommended Practice on Local Authority Accounting in the United Kingdom 2002’. I report if it does not meet the requirements specified by CIPFA/LASAAC or if the statement is misleading or inconsistent with other information I am aware of from my audit of the financial statements. My review was not performed for any purpose connected with any specific transaction and should not be relied upon for any such purpose.
I read the other information published with the statement of accounts and consider the implications for my report if I become aware of any apparent misstatements or material inconsistencies with the statement of accounts.
Basis of audit opinion
I conducted my audit in accordance with the Audit Commission Act 1998 and the Code of Audit Practice issued by the Audit Commission, which requires compliance with relevant Auditing Standards issued by the Auditing Practices Board.
An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Council in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Council's circumstances, consistently applied and adequately disclosed. The work that I carried out also included examination, on a test basis, of evidence relevant to the amounts of contributions payable to the scheme and timing of those payments..
I planned and performed my audit so as to obtain all the information and explanations which I considered necessary in order to provide me with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming my opinion, I evaluated the overall adequacy of the presentation of the information in the financial statements.
Opinion
In my opinion the financial statements present fairly the financial transactions of Oxfordshire County Pension Fund during the year ended 31 March 2003, and the amount and disposition at that date of its assets and liabilities, other than liabilities to pay pensions and benefits after the end of the scheme year.
Certificate
I certify that I have completed the audit of the accounts in accordance with the requirements of the Audit Commission Act 1998 and the Code of Audit Practice issued by the Audit Commission.

Signature:		Andy Burns	 Date:		31 October 2003

Name:		Andy Burns	 Address:	Unit 5
ISIS Business Centre
Horspath Road
Cowley
OXFORD  OX4 2RD

APPENDIX 2
The Audit Commission’s requirements in respect of Independence and Objectivity
The following currently relates to auditors. The Commission is currently considering how this will be extended to cover all staff.
Auditors appointed by the Audit Commission are subject to the Code of Audit Practice (the Code) which includes the requirement to comply with Statements of Auditing Standards (SAS) when auditing the financial statements. SAS 610.3 requires auditors to communicate to those charged with governance, at least annually, all relationships that may bear on the firm’s independence and the objectivity of the audit engagement partner and audit staff. 
The SAS defines ‘those charged with governance’ as ‘those persons entrusted with the supervision, control and direction of an entity’.  In the case of Oxfordshire County Council it has been agreed that the appropriate addressee of communications from the auditor to those charged with governance is the Council. 
Auditors are required by the Code to: 
•	carry out their work with independence and objectivity;
•	exercise their professional judgement and act independently of both the Commission and the audited body;
•	maintain an objective attitude at all times and not act in any way that might give rise to, or be perceived to give rise to, a conflict of interest;
•	resist any improper attempt to influence their judgement in the conduct of the audit.
In addition, the Code specifies that auditors, or any firm with which an auditor is associated, should not carry out work for an audited body, which does not relate directly to the discharge of the auditors’ functions if it would impair the auditors’ independence or might give rise to a reasonable perception that their independence could be impaired. If auditors are satisfied that performance of such additional work will not impair their independence as auditors, nor be reasonably perceived by members of the public to do so, and the value of the work in total in any financial year does not exceed a de minimis amount (currently the higher of £25,000 or 20% of the annual audit fee), then auditors may undertake such work at their own discretion. If the value of the work in total for an audited body in any financial year would exceed the de minimis amount, auditors must obtain approval from the Commission before agreeing to carry out the work.
The Code also states that the Commission issues guidance under its powers to appoint auditors and to determine their terms of appointment.  The Standing Guidance for Auditors includes several references to arrangements designed to support and reinforce the requirements relating to independence, which auditors must comply with. These are as follows:
•	any staff involved on Commission work who wish to engage in political activity should obtain prior approval from the Partner or Regional Director;
•	audit staff are expected not to accept appointments as lay school inspectors;
•	auditors are expected to comply with the Commission’s statements on firms not providing personal financial or tax advice to certain senior individuals at their audited bodies, auditors’ conflicts of interest in relation to PFI procurement at audited bodies, and disposal of consultancy practices and auditors’ independence;
•	auditors appointed by the Commission should not accept engagements which involve commenting on the performance of other Commission auditors on Commission work without first consulting the Commission;
•	auditors are expected to comply with the Commission’s policy for both the District Auditor and the second in command (Audit Manager 1) to be changed on each audit at least once every five years with effect from 1 April 2003 (subject to agreed transitional arrangements);
•	audit suppliers are required to obtain the Commission’s written approval prior to changing any District Auditor in respect of each audited body; and
•	the Commission must be notified of any change of second in command within one month of making the change. Where a new District Auditor or second in command has not previously undertaken audits under the Audit Commission Act 1998 or has not previously worked for the audit supplier, the audit supplier is required to provide brief details of the individual’s relevant qualifications, skills and experience.

APPENDIX 3
Analysis of errors and omissions
Statement	Description	Amount	
Note 1: Accounting Policies	The statement of accounts presented for audit did not include Note 1 in respect of the Accounting Policies of the Pension Fund.	N/A	
Note 13: assets under external management	The market value of assets under external management has been stated as £627million as at 29 March 2002. Details have not been updated to show value at 31 March 2003.	N/A	
Note 15: Top 5 Holdings	Typographical error that heading states top ten and not top five.	N/A	
Contribution rates from participating employer	Contribution rate for Cherwell district Council disclosed as 220%. The correct figure from the actuarial valuation is 230%.	N/A	
Name of external auditors	The external auditor is shown as District Audit and not Audit Commission.	N/A	
Statement of Investment Principles	The Statement of Investment Principles was missing from the original set of accounts.	N/A	

APPENDIX 4
Additional disclosures required
Statement	Description	
PBSE	The Pension Fund has appointed a global custodian and four pension fund investment managers since the end of the financial year under review. No mention of this is included specifically as a post balance sheet event in either the annual report or the notes to the statement of accounts.
Wording to be inserted as a PBSE note to the Pension Fund Accounts:
The Council has reviewed the management of the Pension Fund since the financial year end and has subsequently appointed a global custodian and four pension fund investment managers.	
Transfer out	A creditor for £5m has been included in respect of the transfer of the Probation service out of the pension fund. At present there is a disagreement between the actuaries involved on the method to be used in placing a value on the transfer. Working papers to support the inclusion of £5m as a creditor were not available, but would be produced on a member of staffs return from annual leave in mid September. 
Disclosure of this dispute – or the present state of this transfer and any uncertainties which could lead to a potential misstatement – needs to be included in the Statement of Accounts.
Wording to be inserted as a PBSE note to the Pension Fund Accounts:
A creditor for £5m has been included for the transfer of the Probation service out of the Pension Fund. As at the date of the issuing of the external auditor’s opinion, this transfer had not yet occurred; the Council was awaiting confirmation from the actuary for the Probation Service’s administering authority to confirm the transfer. 	
PBSE	Additional disclosures required to explain the impact of the changes in value of investments leading to the significant reduction in market value. The following note - Pension Fund Investments - was included in the 2001/02 accounts under Note 28: Post Balance Sheet Events in the Council’s Statement of Accounts:
The recent falls in the value of shares on world stock markets will have a short-term impact on the investment of the Pension Fund and, in turn, on the financial position of the Council. The Council continues to monitor events closely and will take necessary action based on professional advice. 
Given the continued drop in value of investments further disclosure is needed.
Wording to be inserted as a PBSE note to the Pension Fund Accounts AND the accounts for the County Council:
The recent falls in the value of shares on world stock markets will have a short-term impact on the investment of the Pension Fund and, in turn, on the financial position of the Council. The Council continues to monitor events closely and will take necessary action based on professional advice. The Council’s next full actuarial valuation will be based on the position of the fund at 31 March 2004. The results of this valuation will determine the level of contribution rates. 	
PBSE	The Council should disclose the change in actuaries resulting from the end of Watson Wyatt’s contract as fund actuaries as of November 2003. 
Wording to be inserted as a PBSE note to the Pension Fund Accounts:
The Council will be appointing a new actuary for the Pension Fund from the beginning of November 2003 to replace the current actuary, Watson Wyatt, whose contract finishes at the end of October 2003.	

APPENDIX 5
Opinion Audit – matters arising
Introduction and approach
In giving our opinion on the Pension Fund’s financial accounts, we undertake a review of the core financial processes. These are the Main Accounting System, Budgetary Control and Closedown Procedures. This involves ascertaining the Pension Fund’s system for recording, processing and monitoring transactions and assessing its adequacy as a basis for the preparation of the statements of accounts.  
We undertook this work at the same time as our opinion audit and concluded that overall we are able to rely on the core financial processes for opinion purposes. Given this base we are able to concentrate our final accounts audit on: 
•	Agreement to the Pensions SORP and Accounts and Audit Regulations 2003
•	Analytical Review
•	Agreement to the general ledger
•	Specific risk areas.
Issues arising
The main issues arising from our final accounts work are set out below.
Acknowledgements
We would like to thank the Council’s staff, and in particular Tony Wheeler, for their co-operation and help during our visit.

Audit of annual financial statements – matters arising  

Ref.	Finding	Recommendation	Priority (H/M/L)	Response	Responsible	Target date	
	OPINION AUDIT: statement of accounts						
R1
EX.78	Note 1: Accounting policies
The statement of accounts presented for audit did not include Note 1 in respect of the Accounting Policies of the Pension Fund.	High level review of the financial statements should be undertaken to ensure completeness before presentation to the auditors	H	Now included and will ensure full set of accounts is presented for audit for next year	Tony Wheeler	September 2003	
R2
EX.79	Note 13: assets under external management
The market value of assets under external management has been stated as £627million as at 29 March 2002. Details have not been updated to show value at 31 March 2003.	Details should be amended to show value at 31 March 2003	H	Amended version of the accounts now shows value of assets under external management as £484million.	Tony Wheeler	September 2003	
R3
Ex.80	Note 15: Top 5 Holdings
Typographical error that heading states top ten and not top five	Amend accordingly	H	Now amended	Tony Wheeler	September 2003	
R4
EX.81	Contribution rates from participating employer
Contribution rate for Cherwell district Council disclosed as 220%. The correct figure from the actuarial valuation is 230%	Amend accordingly	H	Now amended	Tony Wheeler	September 2003	
R5
EX.84	PBSE
The Pension Fund has appointed a global custodian and four pension fund investment managers since the end of the financial year under review. No mention of this is included specifically as a post balance sheet event in either the annual report or the notes to the statement of accounts.	A note should be included indicating the changes to the investment managers. 
	H	Will include – notes do mention change in fund managers but accept need to also include reference to global custodian.	Tony Wheeler	September 2003	

Ref.	Finding	Recommendation	Priority (H/M/L)	Response	Responsible	Target date	
	OPINION AUDIT: statement of accounts						
R6
EX.85	Contributions receivable
A provisional contribution rate was set for The Order of St. John's Care Trust at 240%. The actuary has now completed their review and a rate of 255% has been set. This has resulted in an underpayment which will be invoiced to the Trust in 2003/04. The debtor to be raised for the underpayments in 2001/02 and 2002/03 amounts to approx. £55000. 	No amendment to accounts is required BUT ensure correct treatment in 2003/04 accounts	M	Council Pensions staff are aware of this and have written twice to the Trust to arrange for payments.
Staff aim to raise and collect the debtor during 2003/04.	Barry Phillips / Jenny Wylie	Ongoing
For resolution prior to end of March 2004	
R7
EX.87	Transfers out
A creditor for £5m has been included in respect of the transfer of the Probation service out of the pension fund. At present there is a disagreement between the actuaries involved on the method to be used in placing a value on the transfer. Working papers to support the inclusion of £5m as a creditor were not available, but would be produced on a member of staffs return from annual leave in mid September. No disclosure of this dispute has been included in the SOA's.	Depending on evidence produced and the dispute not being resolved, these facts may have to be disclosed.
	H	Now amended	Tony Wheeler	September 2003	

Ref.	Finding	Recommendation	Priority (H/M/L)	Response	Responsible	Target date	
	OPINION AUDIT: statement of accounts						
R8
EX.88	Membership numbers
There is a difference in the disclosure of the membership numbers relating to contributory employees in the authorities’ statement of accounts (14,302) and the Annual Report and Accounts (14,858). The difference of 556 is nearly 4% of the membership figure in the accounts. The pension interface is not working so an estimate was made of employees who joined the scheme since the introduction of SAP. Also, there were delays in authorities returning annual returns so membership numbers at 31 March are overstated (before the reconciliation process has been completed, i.e. before adjusting for employees who have decided not to enter the scheme; thus accurate membership details are not included in the annual statement of accounts). The authority has intimated that the 14,302 figure is used as this is nearer the actual membership numbers. 	Year end reconciliation work should be completed as soon as possible and efforts should be made to ensure that the problems with the interface are resolved so that accurate membership numbers can be obtained for 2003/04. 
	H	Accept; Administration section will impose an earlier deadline for receipt of membership numbers.
Improvements in the interface will be addressed in time for the 2003/04 closedown process.	Barry Phillips / Sally Fox	20 Feb 2004	
R9
EX.89	Sundry debtor – Cherwell DC
A debtor was raised in respect of pension hidden costs for Cherwell DC. amounting to £19025.76. The invoice for this amount has not been raised and forwarded to Cherwell DC. 	An invoice should be raised as soon as possible.
	M	Accept; this will be followed up.	Barry Phillips / Sally Fox	20 Feb 2004	
R10
EX.91	Incorrect name of external auditors
The external auditor is shown as District Audit and not Audit Commission	Change to Audit Commission.	H	Now amended	Tony Wheeler	September 2003	

Ref.	Finding	Recommendation	Priority (H/M/L)	Response	Responsible	Target date	
	OPINION AUDIT: statement of accounts						
R11
EX.92	Omission of Statement of Investment Principles
The Statement of Investment Principles was missing from the original set of accounts	Include Statement of Investment Principles.	H	Now included; this was not attached with original set of accounts as it has gone to Pension Fund Committee for approval	Tony Wheeler	September 2003	
	OPINION AUDIT: process issues						
R12
EX.83	Budget reporting
The pension fund set budgets for 2002/03 in respect of investment management and scheme administration costs. However no reporting was made to members during 2002/03 in respect of comparisons between budgets and actual. 	Reports should be devised to ensure adequate information is relayed to members in respect of variances between budget and actual for investment management and scheme administration costs	M	Accept: will incorporate into future years monitoring arrangements (already being monitored for 2003/04 due to change in fund management arrangements).	Tony Wheeler	20 Feb 2004	
R13
EX.86	Membership numbers
Membership numbers are taken at 31st March. They include employees that may have decided not to join the pension fund. Delays are experienced in authorities returning annual returns, thus accurate membership details are not included in the annual statement of accounts. 	Efforts should be made to seek compliance with a timetable that would ensure that accurate membership numbers were available for inclusion in the annual financial statements. 	H	See R8 above	See R8 above	See R8 above