The Importance of Knowing a Pension Scheme Auditor’s Reputation

Choosing a pension scheme auditor is a crucial decision for pension trustees.

As the audit firm plays a vital role in the financial health and compliance of the pension scheme, knowing as much as you can about the potential audit firm is good due diligence.

This article explores the steps pension trustees should take in assessing the reputation of a pension audit firm so that they can be sure of making a well-informed choice when appointing a firm to audit their scheme.

1. The Role of a Pension Scheme Auditor

Pension Scheme Audit firms examine pension scheme financials to ensure they are accurate and that the scheme complies with pension regulations.

Responsibilities include evaluating internal controls, verifying the scheme assets’ value, and ensuring correct contributions and benefits.

Given the complexity and importance of this work, pension scheme auditor reputation is a key issue that trustees need to be aware of.

2. Research the Pension Scheme Auditor’s Reputation in the Press

First, check a pension scheme auditor’s reputation by looking for news about them.

Places to look include:

• The Pension Industry Media: Look for articles or news about the audit firm. This will give you a picture of their work and involvement in the industry.
• Professional Associations: These have directories of members. For more information, visit the ICAEW website.
• Industry Awards and Recognitions: can show a firm’s excellence and reliability. Check if the firm has been shortlisted or won any awards for its work in pension auditing. Information will be on sites Accountancy Age, Pensions Age, and Professional Pensions

3. Seeking References and Testimonials

References and testimonials from existing or past clients can provide valuable insights into the pension scheme auditor’s reputation. Here are some strategies:

• Client References: Request a list of current or past clients from the audit firm. Contact these clients to enquire about their experiences. Ask specific questions about the auditor’s thoroughness, professionalism, responsiveness, and overall quality of work.
• Online Reviews and Testimonials: Many firms publish client testimonials on their websites. Additionally, independent review sites or forums related to pension schemes might have reviews about the firm.
• Using Your Network: Leveraging your network of contacts can provide personalised and candid insights into potential auditors. If you are a trustee or pension administrator, you likely have a network of colleagues, industry peers, and contacts who have experience with various audit firms. Reach out to these contacts to gather firsthand accounts and recommendations. Personal referrals from trusted colleagues are often more revealing than formal references or online reviews.
• LinkedIn: Use LinkedIn to research audit firms and their professionals. LinkedIn has various groups, such as the?Pensions Age LinkedIn Group?and?the Pension Administration LinkedIn Group, where you can find discussions and recommendations related to pension auditing. Additionally, you can look up profiles of audit firms and their employees, see their connections, and read any recommendations or endorsements.

4. Checking for Disciplinary Actions and Regulatory Compliance

Ensuring that the audit firm has a clean record and complies with all relevant regulations is crucial. Here’s how to verify this:

• Regulatory Bodies: Check with regulatory bodies such as the Financial Reporting Council (FRC). These organisations often maintain records of disciplinary actions or sanctions against audit firms. The FRC website provides access to such information.
• Professional Conduct: Verify if the firm has been subject to disciplinary actions by professional bodies like the ICAEW. Disciplinary records can provide insights into potential issues with the firm’s practices.
• Public Records: Search public records for legal actions against the firm. This can include lawsuits or other legal disputes that might indicate problems with the firm’s operations or ethics. Websites like Companies House can be used for such searches.

5. Evaluating Experience and Expertise

Experience and expertise in pension scheme auditing are vital. Here’s how trustees can assess the pension scheme auditor’s reputation in this regard:

• Track Record: Evaluate the firm’s track record in auditing pension schemes. How many schemes have they audited, and what types of schemes (e.g., defined benefit, defined contribution) do they specialise in?
• Professional Qualifications: Check the qualifications of the firm’s auditors. Look for certifications and professional development activities demonstrating their expertise and commitment to staying current.
• Case Studies: Ask for case studies or examples of how the firm has handled complex auditing situations. This can provide insights into their problem-solving abilities and expertise.

6. Assessing Technological Capabilities and Methodologies

Modern auditing requires advanced technological tools and methodologies. Here’s how to evaluate a firm’s capabilities and ensure the pension scheme auditor’s reputation is backed by technological proficiency:

• Technological Tools: Inquire about the tools and software the firm uses for auditing. Advanced tools can enhance accuracy and efficiency. These tools offer various features such as audit tracking, automated report generation, and integration with other financial systems, which can significantly improve the efficiency and accuracy of audits.
• Audit Methodologies: Understand the firm’s audit methodologies. Effective methodologies should include comprehensive risk assessments, robust internal control evaluations, and thorough testing procedures. Enquiring about their audit approach can help you determine if they follow best practices and maintain high standards.
• Data Security: Given the sensitivity of financial data, ensure the firm has strong data security measures in place to protect confidential information. Look for certifications like Cyber Essentials and ISO/IEC 27001, which indicate robust cybersecurity practices and compliance with international standards for information security.

7. Conducting Interviews and Meetings

Finally, personal interactions can provide invaluable insights:

• Initial Meeting: Arrange an initial meeting with the audit firm. Use this opportunity to ask questions, gauge their responsiveness, and assess their willingness to tailor their services to your scheme’s needs.
• Team Introduction: Meet the team members working on your audit. Ensure they have the necessary expertise and that you feel confident in their abilities.
• Communication Style: Evaluate the firm’s communication style and ensure it meets your expectations. Clear, transparent, and proactive communication is essential for a successful audit.

8. Five Key Questions to Ask

To establish and check the reputation of a potential pension scheme auditor, consider asking the following key questions during your interactions:

1. What is your experience in auditing pension schemes similar to ours? This question helps you understand the firm’s expertise and experience in handling schemes similar to yours.
2. Can you provide references from clients in the pension industry? Asking for references allows you to verify their reputation and get firsthand accounts of their performance from other clients.
3. What measures do you take to ensure compliance with industry regulations and standards? This question assesses their commitment to staying updated with regulatory changes and maintaining compliance.
4. How do you handle and secure sensitive data during the audit process? Ensure they have robust data security practices, such as Cyber Essentials and ISO/IEC 27001 certifications.
5. Can you provide examples of challenges you have faced in previous audits and how you addressed them? Understanding their problem-solving capabilities and how they handle complex situations can give you confidence in their expertise.

Pension Scheme Auditor Reputation – Conclusions

Choosing a pension scheme auditor is a crucial decision for Trustees

Trustees should research the reputation of pension scheme auditors. Get references and testimonials. Check for disciplinary actions. Check their experience and expertise. Determine their technology capabilities and interview them.

By doing this, Trustees will ensure they choose a reliable and competent audit firm, which in turn helps safeguard the financials and compliance of their pension scheme.

For example, at Assure UK, while we know we are a top choice for any pension scheme audit, we still urge Trustees to diligently review our firm (and others they are considering) to help ensure they make the best choice for their specific needs.

Assure UK’s Approach to Pension Scheme Audits

Assure UK was founded in late 2012 as a dedicated and specialist pension schemes audit firm that offers pension trustees and managers a level of customer service they didn’t think was possible.

A Specialist Pension Scheme Auditor You Can Rely On

Regardless of the size of your pension scheme, you need everything to work like clockwork so that sign-off can be achieved within seven months of your scheme’s year-end.

Assure UK does that with a hassle-free, timely, and expert service that takes the pressure off you. Oh, and with the added benefit of fixed fees from the outset, you’ll have additional peace of mind.

By being a focused specialist firm in pension scheme audits, our team of experts brings a depth of experience and knowledge to pension audits that few general accountancy firms can match. Making your audit with us both smooth and tailored to your needs, plus with the benefit of knowing that we have met, advised on, and dealt with all manner of risk areas.

An endorsement of our expertise in pension scheme audits is that we are one of only four accountancy firms in the UK that are on the?Pension Protection Fund’s Audit Services Panel.

For more information about our services or advice on improving your pension audits and assurance reporting, please connect with us on social media, sign up for our newsletter, and regularly visit our website.

Alternatively, call us at 020 7112 8300, [email protected],