Efficient Pensions Audits for Trustees: Relationships Matter

Why It Matters

Reducing duplicated audit requests saves trustees time and limits compliance risk, while improving audit quality benefits scheme members and sponsors.

Key Takeaways

• Duplicate requests increase trustees' workload
• Early audit planning aligns scheme and sponsor timelines
• Direct sharing of audit work papers is generally prohibited
• Materiality thresholds differ between scheme and sponsor audits
• Clear communication reduces redundant information requests

Pulse Analysis

The audit of a defined‑benefit pension scheme runs alongside the sponsor’s financial statements. Trustees, as custodians of members’ benefits, must satisfy both scheme auditors and sponsor‑entity auditors. Recent FRC inspections have heightened scrutiny on pension balances, prompting firms to test source data and actuarial assumptions more rigorously. ICAEW guidance stresses that effective outcomes rely on clear, collaborative relationships among trustees, auditors, and management. The dual audit environment also introduces distinct regulatory expectations, with the Financial Reporting Council overseeing audit quality for both entities.

Duplicate information requests are a common burden. Scheme auditors and sponsor auditors use different materiality thresholds—scheme audits focus on total assets, sponsor audits on profit and loss—so the same data often must be supplied in distinct formats. Professional standards also forbid auditors from sharing working papers with a third‑party firm, even with trustee consent, to preserve independence. Because sponsor auditors often require source‑level confirmations, trustees must authorise third parties, adding another coordination layer. Mismatched year‑ends further amplify the perception of a double audit, inflating workload and error risk.

Mitigation starts with early audit planning. Trustees should obtain the sponsor‑entity audit timetable, align it with the scheme schedule, and negotiate a joint information‑sharing calendar that includes custodians. Clarifying each request’s purpose—whether for materiality testing or compliance—allows consolidation of responses. Ongoing dialogue with both audit teams reduces redundant paperwork, cuts costs, and strengthens assurance, ultimately protecting the pension promises owed to members. By documenting agreed timelines and responsibilities, trustees create a transparent audit roadmap that can be referenced during any unexpected inquiries.