Agenda item

To be presented by Grant Thornton and Julie Edwards, Pensions and Investments Manager, Buckinghamshire Council.

The Chairman agreed to take this item before the item entitled ‘Audit of 2021/22 Accounts’.

Grant Thornton presented the audited Statement of Accounts for Buckinghamshire Pension Fund for the year ended 31 March 2021 to the Committee.

The audited Statement of Accounts for the Buckinghamshire Pension Fund for the year ended 31 March 2021 was attached as Appendix 1. The Buckinghamshire Pension Fund Accounts and Net Assets Statement showed that in the year to 31 March 2021 the value of the Pension Fund increased by £725m to £3.638bn. This was the net result of the contributions made (£177m) including transfers in from other pension schemes, employers’ contributions and employees’ contributions; payments out £140m including pensions, commutations, lump sum retirement benefit and death benefits; management expenses £18m plus net returns on investments (£725m).

The draft Audit Findings Report for the Buckinghamshire Pension Fund for the year ended 31 March 2021 was attached as Appendix 2. Grant Thornton had substantially completed the audit and they had not identified any adjustments to the financial statements that impact the Buckinghamshire Pension Fund’s net asset position. Grant Thornton anticipated issuing an unqualified audit report opinion. The formal sign off for the Pension Fund Statement of Accounts would take place at the same time as the formal sign off for Buckinghamshire Council’s Statement of Accounts which was anticipated to be during 2023. On the morning of the 5 July 2023, the Audit and Governance Committee approved the Buckinghamshire Pension Fund Statement of Accounts 2020/21 and delegated final sign off of the Statement of Accounts to the Chairman of Audit and Governance Committee and the S151 Officer subject to:

• No material changes in the accounts.
• Final sign off by the external auditors of Buckinghamshire Council accounts 2020/21.
• And, subject to the Pension Fund Committee endorsing management’s proposed treatment of not adjusting the Statement of Accounts to reflect the potential £8.939m overstatement.

Most of the audit work took place during the summer of 2021. The audited accounts and the draft Audit Findings Report were presented to Pension Fund Committee and the Audit and Governance Committee on 9 September 2021 and 29th September 2021 respectively. Since September 2021 there had been some further work undertaken on Level 2 investments and further review of the audit working papers following a change of Audit Director. Level 2 investments were investments where quoted market prices were not available, the Financial Reporting Council (FRC) introduced additional audit requirements in 2022.

The Committee noted the three main changes to the draft Audit Findings Report considered by Committee in September 2021:

• Page 10 significant judgement or estimate Level 2 investments £3,410m. The Buckinghamshire Pension Fund had investments in a range of bonds, pooled investment vehicles and property unit trusts that in total were valued in the net assets statement as at 31 March 2021 at £3,410m. Grant Thornton’s testing identified an overstatement of £2.21m in the value of the Brunel Smaller Companies fund as a result of differences in the share price used by Buckinghamshire Pension Fund and the share price recorded on FT.com. Grant Thornton estimated the potential error in the untested residual population as an overstatement of £6.72m, giving a total overstatement of £8.939m which had been recorded as an unadjusted error. On the morning of 5th July 2023, the Audit and Governance Committee agreed to approve management’s proposed treatment of not adjusting the Statement of Accounts to reflect the £8.939m overstatement, subject to the Pension Fund Committee endorsing this approach.
• Page 23 reclassification of cash in the current and prior period – in note 12, pages 22, 24 and 25 of the Buckinghamshire Pension Fund Statement of Accounts the Fund was erroneously classifying cash held in money market funds as a financial asset at amortised cost.
• Page 26 Note 3 – Contributions– a footnote was added to explain the increase in employee contributions to note 3, pages 13 of the Buckinghamshire Pension Fund Statement of Accounts.

Grant Thornton confirmed that once the Statement of Accounts had been formally signed off, there would be no more changes made to the accounts. 

With regard to the £8.939m overstatement, the Committee agreed to endorse management’s proposed approach of not adjusting the Statement of Accounts to reflect the overstatement.

Having reviewed the audited Statement of Accounts for Buckinghamshire Pension Fund for the year ended 31 March 2021, the Committee: -

RESOLVED:

That the audited Statement of Accounts for Buckinghamshire Pension Fund for the year ended 31 March 2021 be noted.