The External Auditor will present Document “P” which summarises the findings of the audit of West Yorkshire Pension Fund’s Financial Statements for the year ended 31 March 2020.

Recommended-

That the Committee:

·         Consider the unadjusted misstatements schedule (Section 4); and

·         Approve the letter of requested management representations (Appendix A) including the reasons for not amending the unadjusted misstatements.

(Sharon Liddle – 07881 283343)

The External Auditor presented Document “P” which summarised the findings of the audit of West Yorkshire Pension Fund’s Financial Statements for the year ended 31 March 2020.

The External Auditor reported that their work was substantially complete and anticipated issuing an unqualified opinion, without modification on the financial statements; it was anticipated, when concluded, that the Pension Fund financial statements within the Pension Fund’s Annual Report would be consistent with the Pension Fund Financial Statements within the Statement of Accounts of City of Bradford Metropolitan District Council.

The External Auditor reported that the difficult circumstances the Pension Fund was facing in order to respond to the pandemic were understood and thanked officers for their assistance during the audit.

Members were informed that due to the difficulties caused by the pandemic it was most likely that the audit work would be completed by next Friday which was similar to other authorities.

Clarification was sought in relation to the risk relating to valuation of level 3 unquoted investments for which a market price was not readily available. A reply was given that such investments were within the parameters of the Strategy set by the Investment Panel and valuations were conservative.

The External Auditor gave a verbal update at the meeting, regarding matters that were outstanding when the Audit Completion Report was submitted for inclusion in the Committee papers. She reported that:

·         Financial Instruments – completed the audit work with additional amendments which included an additional £55.3m transferred from level 2 to level 3 of the fair value hierarchy; this had also impacted on the financial instruments disclosures of sensitivity of assets valued at level 3 and the reconciliation of fair value measurements within level 3, and on the split of property funds between quoted and unquoted in note 17 of the report.

·         There have been a number of classification amendments within Note 23b Price Risk.

·         Actuary’s Report – work had completed - noted no differences
between the actuary’s report and the disclosure made in
the accounts.

·         Consistency opinion - Information within the Pension Fund Annual Report was consistent with the financial statements within Bradford
Council’s Statement of Accounts.

·         Closure procedures and review - work completed with a number of presentational issues not requiring separate disclosure.

·         Internal Control Deficiency – Officers had reviewed audited financial statements and service auditor reports for the unquoted
funds within the Fund’s portfolio on a sample basis, but these reviews were not evidenced;  if reviews were not formalised and evidenced, there was a risk that the Fund may be unaware of issues such as adverse audit opinions, inaccurate valuations or control deficiencies in underlying investment funds; if such issues were unidentified and significant, this could lead to inaccuracies in the Fund’s financial reporting; it was recommended that Officers formalise and evidence the review of the audited financial statements and service auditor reports for material unquoted funds in which the Fund was invested.

Resolved-

That the Committee:

·         Considered the unadjusted misstatements schedule (Section 4 to Document “P”); and

·         Approved the letter of anagement representations (Appendix A to Document “P”) including the reasons for not amending the unadjusted misstatements.

Action:  External Audit