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What's Changed in the New Practice Note on Pension Schemes?

By Andy Holton

In November 2017 the Financial reporting Council (FRC) issued a revised version of Practice Note 15: The audit of occupational pension schemes in the United Kingdom.

This latest version reflects:

  >  Revisions to UK auditing standards (ISAs (UK));

  >  Changes to UK accounting standards (FRS 102) and the revision of the pension SORP;

  >  Continuing developments in regulatory codes and guidance issued by The Pensions Regulator (TPR);

  >  Changes in relevant legislation; and

  >  The increase in master trusts in the pension sector following the Pensions Act 2017.

The changes also reflect the FRC’s view that Practice Notes are intended to provide assistance to auditors in interpreting the ISAs and that they are not ‘how to’ manuals for particular audit sectors. This view has resulted in the removal of some guidance and background material included in the previous version. The revised Practice Note is therefore some 100 pages shorter and much more tightly focussed on the audit of the financial statements under the ISAs than its predecessor.

The main changes are as follows:

  • The commentary in respect of a number of the ISAs has been reduced or removed where this was not pensions specific or where it repeated guidance included elsewhere such as in PN-23: Special Considerations in Auditing Financial Instruments.

  • ISA (UK) 210: content has been reduced to focus on pension specific legal requirements on appointment and resignation of auditors. The engagement letter wording and examples previously included have been removed.

  • ISA (UK) 250 Section B: content which sought to interpret TPR’s views on what is reportable has been removed. The revised guidance instead draws the auditor’s attention to the relevant comprehensive codes and guides issued by TPR.

  • ISA (UK) 315: content now focuses on the trustee responsibilities for establishing controls and situations that can give rise to risks rather than providing an incomplete list of possible controls.

  • ISA (UK) 570: content provides additional guidance on going concern and how this applies to pension schemes including identification of circumstances when the going concern basis may not be appropriate.

  • ISA (UK) 700: The content on summary financial information has been deleted as it is now apparently rare for auditors to be asked to review this.

  • The Auditor’s Statement about Contributions section has been amended to bring it up to date and include references to the exemption from obtaining a statement on contributions where a scheme has more than 20 employers.

    It should be noted that there is an error in paragraph 44 of the revised Practice Note that refers to employees rather than employers; however, the exemption is correctly described elsewhere in the Practice Note.

  • Appendices 1, 2 and 3 from the previous version that dealt with principal relevant legislation, the legal & regulatory framework and a list pf publications have been deleted. Relevant content has been included in a new section ‘Key characteristics and background’, but this is not as extensive.

  • The content in appendix 3 (previously appendix 6) has been reduced by the removal of example audit report wording. According to the FRC feedback statement on the revision of PN-15 the FRC does not believe it is necessary to provide example auditor’s reports for all types of audited entity, including pension schemes! However, the Audit & Assurance Faculty of the ICAEW have now published such guidance.

Andy Holton

Divisional Director – Publications

November 2017 

November 2017 


This article is published with the understanding that SWAT UK Limited is not engaged in rendering legal or professional services. The material contained in this article neither purports, nor is intended to be, advice on any particular matter. This article is an aid and cannot be expected to replace professional judgment. SWAT UK accepts no responsibility or liability to any person in respect of anything done or omitted to be done by any such person in reliance, whether sole or partial, upon the whole or any part of the contents of this article.