Engagement objectives

Our primary responsibility as your auditor is to form and express an opinion as to whether the financial statements of the Scheme/Fund/Plan/CIF/Trust prepared under UK Generally Accepted Accounting Practice show a true and fair view and contain the information specified in Regulation 3a of the Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996 (“the Audited Accounts Regulations”) made under the Pensions Act 1995. The Audited Accounts Regulations require a statement whether the financial statements have been prepared in accordance with the Statement of Recommended Practice “Financial Reports of Pension Schemes” issued in July 2018 (“the SORP”).

We also provide a separate Statement about Contributions as required by the Audited Accounts Regulations. This statement is whether, in our opinion, contributions have in all material respects been paid to the Scheme/Fund/Plan/CIF/Trust at least in accordance with the Schedule of Contributions/Payment Schedule.

Our responsibilities also include consideration of whether other information contained in the Annual Report is consistent with the audited financial statements and, if not, consider the implications for our audit report.

Our other responsibilities comprise reporting to you where the Trustees’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate or where the trustees have not disclosed in the financial statements any material uncertainties that may cast significant doubt about the Scheme/Fund/Plan/CIF/Trust’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

We will plan our work with a view to ensuring:

  • minimum disruption to you, your staff and your third party service providers;
  • that reports submitted to you are constructive and clear, focusing on the issues that matter;
  • that surprises are avoided and that good communications are maintained with you throughout the assignment.

Financial statement areas

The principal areas of the financial statements are:

  • contributions;
  • investments;
  • investment return;
  • benefits and transfers.

We will conduct relevant work in all of these areas, as well as concluding on the appropriateness of the trustee’s use of the going concern basis of accounting in the preparation of the financial statements and comment accordingly in our audit report in accordance with ISA (UK) 570 ‘Going Concern’. We also consider whether we have identified material inconsistencies with the financial statements, or material misstatements, in the other information included in the annual report in light of our knowledge and understanding of the scheme obtained during the course of the audit and will report accordingly.

In addition, work will be undertaken to enable us to give our Statement About Contributions.

Our engagement letter sets out in detail our respective responsibilities.

Reliance on internal controls

During the planning phase of our audit we will re-confirm our understanding of the operating environment established by the Trustee/Trustees including internal controls relevant to the audit. Where we plan to place reliance on internal controls, we will test the operation of those controls. If our examination of internal controls leads us to believe there may be significant deficiencies therein, we will report our findings to you.

Scope of work on benefits and record-keeping

Our work on benefits is based on the amounts reported in the financial statements. We therefore consider the aggregate amounts and refer to individual member files for evidence as considered necessary. This evidence does not necessarily involve either the re-performance of calculations performed by others or a detailed examination of all information contained in individual member files.

The Pensions Regulator has issued guidance to Trustees in relation to record-keeping. The scope of the financial statement audit does not extend to individual member records and our audit procedures cannot be used to assess the quality of records held. Our work may, however, provide us with access to a limited number of individual member records. As indicated above, if any of our work leads us to believe there may be significant deficiencies therein, we will report our findings to you

Qualitative aspects of accounting practices and financial reporting

We will discuss with you any areas where our experience as auditor leads us to believe that accounting practices and financial reporting could be improved.

Implication of changes within financial reporting framework, environment, financial condition or activities

We will discuss with you any changes in our planned approach to address the implications on the financial statements and disclosures of any significant changes within the applicable financial reporting framework or in the Scheme/Fund/Plan/CIF/Trust’s environment, financial condition or activities.


The Trustee/Trustees has/have primary responsibility for ensuring that annual financial statements are free from material misstatement or error. In accounting terms, a material error is one that, if it were unadjusted, would cause a user of the financial statements to alter his view of those statements or the results or the financial position of the entity being reported on. Materiality, therefore, is incapable of monetary definition, since it has both quantitative and qualitative elements. It is necessary to consider not only the impact of an error on the financial statements as a whole, but also on the individual accounting items affected. Additionally, the cumulative impact of all unadjusted errors must be considered.

Auditors examine financial statements on a test basis. The level of testing we will carry out is based on our assessment of the risk that an item in the financial statements may be materially misstated (see below). As such, as well as for the reasons stated in the preceding paragraph, it is neither practical nor appropriate to give an indication of the value of an item we would consider to be material although, clearly, we do relatively more work in areas where the risk of misstatement is considered to be high.

A key element of our annual audit planning is to make an assessment of the risk that the financial statements might contain material errors. We base this assessment on our knowledge of the Scheme/Fund/Plan/CIF/Trust and the environment in which it operates. We assess risk both at the overall financial statement and at the individual item levels. Risk assessments may be amended as the audit progresses. The nature and volume of audit work we will conduct are directly related to the outcome of our risk assessments.

The same principles apply to our Statement About Contributions.

Going concern

The going concern concept does not play the same fundamental role in the measurement and classification of assets and liabilities in Pension Scheme accounts as it does in the accounts of commercial entities. Accordingly, the basis of preparation of the accounts does not need to refer to the going concern concept unless the Trustee/Trustees or the sponsoring employer has taken the decision to wind up the Scheme/Fund/Plan/CIF/Trust or an event has taken place that triggers the winding up of the Scheme/Fund/Plan/CIF/Trust.

The Trustee/Trustees is/are, however, required to disclose information relevant to the Scheme/Fund/Plan/CIF/Trust’s ability to continue as a going concern in the accounts. If the Trustee/Trustees is/are aware that the sponsoring employer is experiencing financial difficulties which are likely to result in the scheme either winding up or entering the Pension Protection Fund assessment period, the basis of preparation of the accounts should not change, but relevant disclosures should be included in the annual report.

We will consider the basis on which the Trustee/Trustees has/have concluded on the going concern assumption and the appropriateness of any disclosures made.

Dealing with errors

We will record and investigate all potential errors that we discover during our work and, except for matters which we judge to be clearly trivial, communicate our findings to the Trustee/Trustees and, where appropriate, to management directly responsible for the preparation of the Scheme/Fund/Plan/CIF/Trust’s financial statements. These matters will include the adequacy of disclosures made within the financial statements. The Trustee/Trustees must decide which errors are material and therefore require adjustment if the financial statements are to show a true and fair view. We will ask the Trustee/Trustees to provide us with written explanations supporting any decision not to make adjustments, which we will discuss with them. If we cannot agree with the decisions of the Trustee/Trustees, we will consider the implications for our audit opinion.

In accordance with the requirements of ISA (UK) 260 ‘Communication with those charged with governance’, we are required to report to you all known adjusted and unadjusted errors (including those relating to disclosures within the financial statements) unless they are considered ‘clearly trivial’. We will request written representation that you are comfortable with any unadjusted errors and the reasons for adjustment not being made.


In accordance with the requirements of ISA (UK) 240, we will consider the susceptibility of the Scheme/Fund/Plan/CIF/Trust to fraud, taking account of the operational and control environment established and maintained by the Trustee/Trustees, as well as the nature of transactions, assets and liabilities recorded in the accounting records. However, the principal responsibility for the prevention and detection of fraud rests with the Trustee/Trustees who should not rely on the audit to discharge those functions. We will request a written representation that you have disclosed to us the results of your assessment of the risk that the financial statements may be materially misstated as a result of fraud.

We will report, as soon as practicable, any suspected or discovered fraud which comes to our attention, even if the potential effect on the financial statements is immaterial, unless there is a legal or regulatory requirement to report direct to a third party.

Compliance with law and regulations

We will report, as soon as practicable, any suspected or actual non-compliance with law or regulations which comes to our attention, unless there is a legal or regulatory requirement to report direct to a third party.

Audit scope limitations

Should any factors arise during the course of our audit that may limit our scope, we will inform you immediately and seek to have the limitation removed.

Information and access

We will request a written representation that you have provided us with all relevant information and access as set out in the current letter of engagement, and that all transactions have been recorded and are reflected in the financial statements.

Our audit findings report may include an appendix on Scheme Governance. If produced, this report will include a summary of the Scheme/Fund/Plan/CIF/Trust’s results to our controls questionnaire and will be compared to an average scheme compiled using summary data on a confidential basis from other schemes audited by RSM. The report will enable Trustees to see how they compare to other schemes and where improvements in governance levels can be achieved. Should you not wish your data to be used in our averages, or if you do not wish to take part in this governance exercise, please let us know.

Audit Report and auditor’s responsibilities for the audit of the financial statements

ISA (UK) 700 (revised June 2016) Forming an opinion and reporting on financial statements provides auditors with options as to the location in the audit report of the description of the auditor’s responsibilities for the audit of the financial statements. Those options are:

  1. cross refer to the applicable version of a “Description of the Auditor’s Responsibilities for the Audit of the Financial Statements” that is maintained on the Financial Reporting Council website; or
  2. include the description within an appendix to the auditor’s report and include a reference to the location of the appendix within the auditor’s report; or
  3. include the description within the body of the auditor’s report.

It is RSM policy to adopt option (1) unless there is a compelling reason as to why an alternative should be adopted. We believe this policy achieves the objective of brevity within the audit report whilst at the same time providing members with the option to review the detailed description of the auditor’s responsibilities for the audit of the financial statements as promulgated by the Financial Reporting Council on its website.

Quality reviews

Independent quality reviews are carried out by our Quality Assurance Department on a rotational basis as recommended by the Risk Advisory Group and agreed by the Board of RSM UK Audit LLP. The reviews are undertaken by experienced principals and staff not connected with the audit. The inspection includes testing of the effectiveness and quality of our audits and a continuous improvement programme exists to ensure that standards are maintained and improved.

Technical review

For larger schemes the financial statements are subject to an independent ‘technical review’ by a senior independent member of our technical department (or a person with appropriate expertise approved by them) before the financial statements are signed by the Trustee/Trustees. The purpose of this is to identify any areas of non-compliance with UK law, Accounting Standards and other regulatory requirements that may be contained within the draft accounts and discuss the implications with the audit team. The technical reviewer will also consider key areas of our audit working papers to confirm that sufficient, appropriate, audit evidence has been obtained in respect of all significant audit risks.