Pension Trustes: Evaluating your schema Auditor

Guidance on assessing the pension scheme’s auditor and the selection and appointment of a new auditor.


This guide is designed to assist pension trustees in managing and reviewing the service provided by the scheme auditor (the auditor) and to maximise the benefits from the statutory audit process. The guide consists of two checklists, each with a series of questions which should be considered:

  • in an assessment of the auditor; and
  • during an audit tender process.

The questions, whilst not exhaustive, are designed to highlight the relevant issues in order to help pension trustees evaluate the auditor of their pension scheme.

The scope of an audit is defined in accordance with auditing standards. In order to fulfil this statutory requirement, the auditor needs to undertake appropriate work which will be based, in part, on the auditor’s assessment of the accounting and scheme risks. Prior to the audit commencing, the trustees could expect to be informed about the expected timetable and the proposed strategy.

An important element of the audit relationship is the quality of the service, which in a specialised field such as pensions will depend on technical knowledge and experience, and also the quality of the audit staff. Quality is affected too, by the working relationship between the auditor and the parties involved in the audit, and the standards of service are influenced by matters such as the auditor’s ability to meet timetables and to provide constructive feedback. For their part, those working on behalf of the pension scheme should be prepared to engage and openly discuss issues with the auditor and should seek to work with the audit firm in a professional manner.

There are a number of important relationships in a pension scheme audit engagement which need to be managed effectively, including those between the trustees as a governing body, those preparing the accounts, the pension actuary and administrators, other professional advisers, and the employer. It is vital that these relationships allow for open and honest communications between all parties, and trustees should also encourage a positive working relationship with the auditor.

Some pension scheme trustees rely on their administrators and the auditor to manage the audit process, with the trustees only becoming actively involved if a major issue arises. However, trustees remain responsible for evaluating the service and without close involvement it may be difficult for them to assess their auditor, and there may be a temptation to rely on feedback and comments from the pension administrators. Trustees should consider whether there is a need to be more actively involved in the audit process, to ensure that both the pension administrators and the auditor have an effective and efficient approach to the audit. Trustees may wish to consider setting up an audit committee to do so.

This document is not intended to be prescriptive but simply to share good practice. It is relevant to any pension scheme but is particularly appropriate for smaller schemes. When using it, trustees should document a summary of their review and any subsequent conclusions.

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