Issue - meetings

External Audit Report - Warwickshire Pension Fund Annual Audit Plan, Fee Letter 21/22

Meeting: 21/07/2022 - Audit and Standards Committee (Item 2)

2 External Audit Report - Warwickshire Pension Fund Annual Audit Plan, Fee Letter 21/22 pdf icon PDF 272 KB

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The item was introduced by Avtar Sohal (Grant Thornton), who advised the report followed the same principles as those that had been produced in previous years. The report had identified management override of controls and the valuation of Level 3 investments as being the most significant risks. However Avtar Sohal clarified it was not unusual for audits of local authorities to have management overrides flagged as an area of concern, as many would routinely make overprudent estimates to make their financial position look better. Additionally it was not unusual for Level 3 investments to be flagged as a risk, due to levels of financial information relating to them not always being readily available.


Regarding materiality, approximately £1.25million in mis-statements had been reported, which equated to around one per cent of the Fund’s total assets. Avtar Sohal said any errors above this figure would need to go into the Audit Findings Report. He said the Audit Findings Report was on track to be signed off before the statutory deadline, although the amount of work Grant Thornton was having to carry out in relation to audit requirements was increasing. He said if the report was delayed for any reason then Warwickshire County Council would be informed as soon as possible, after the Chair noted there had been previous instances of Council finance staff having to work late or at weekends to make sure the deadline was met.


Responding to a question from the Chair in relation to Level 3 investments, Avtar Sohal said checks were made in accordance with the appropriate guidelines and methodology. Responding to a question from Robert Zara, Avtar Sohal explained that some Level 3 investments were more subjective and did not correlate to stock market levels; for example, the value of a property that the Council might own was subject to market value data. He also explained that the use of the word ‘trivial’ to explain debts or mis-statements was an industry standard, even in cases where significant sums of money were involved. If an error was found then this would be raised and management at Warwickshire County Council would be given the opportunity to amend their financial statements. Grant Thornton had to decide what would be an appropriate level of triviality. Chris Norton (Strategy and Commissioning Manager - Treasury, Pension, Audit and Risk) said that an example of a Level 2 investment was one within a partnership such as Border to Coast, where the Council was not a shareholder but did have a share in the business.


Councillor Kettle said there had been a lot of press coverage about increasing inflation and interest rates. In particular, interest rates had risen significantly in a short period of time and Councillor Kettle said this would have a serious impact on the Pension Fund and the value of the Council’s portfolio. Councillor Kettle also stated his belief that the definitions for Level 2 and 3 investments should be more clearly defined in the Fee Letter, to allow people to have  ...  view the full minutes text for item 2