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12.0 Introduction

This section provides detail about the:

  • requirement on trustees to publish an annual report and audited financial statements
  • contents of the report and the audited financial statement
  • timescales for producing the report and finalising the audited financial statements
  • Statement of Recommended Practice (SORP), and
  • contents of the scheme’s actuarial statement which is expected to form part of the trustees’ report.

Comment

Requirement for trustees to prepare and publish an annual report and audited financial statements

The trustees’ report has to contain a statutory minimum level of information, including a copy of the scheme’s audited financial statements (normally referred to as the scheme’s accounts). Trustees are not obliged to issue their annual report to members. As a result, many schemes choose instead to issue members with a shorter version of the annual report and accounts, providing members with highlights taken from them.

The scheme’s audited annual financial statements have to be finalised and signed on behalf of the trustees and by the auditor within seven months of the end of the year to which they relate (i.e. for year-end 31 March, report and accounts to be signed no later than 31 October).

The Do’s and Don’ts part at the end of this section contains some steps to follow to ensure the annual accounts are prepared on time. 12.7.1 draws attention to the fact that the auditors will now expect to check the steps trustees have taken to comply with the data protection principles [see 10.10.1]. It also indicates that the auditor may, in addition, require details about the steps taken by trustees to minimise their other risks i.e. the auditor may wish to see the trustees’ risk register [8.4.7(a)(Note)], business plan [7.4.6(Note)], conflicts of interest policy [3.4.9] and appraise any Notifiable Events reported [11.5].

Statement of Recommended Practice (SORP)

The Financial Reporting Council (FRC) works to improve standards of financial accounting and reporting to assist readers of financial information and auditors. Under FRC guidelines, guidance is issued in the form of ‘Statements of Recommended Practice’ (SORPs).

The Pensions SORP supplements general accounting principles set out in Financial Reporting Standards, indicating best practice in accounting and financial reporting by pension schemes. In consequence, it is normally necessary to follow the guidance in the Pensions SORP in order for pension scheme financial statements to show a true and fair view. 

The SORP encourages the inclusion in the trustees’ annual report of Summary Funding Statements [see 14.7.6], though actuarial liabilities continue (for the time being) to be excluded from the net assets statement of Defined Benefit and hybrid schemes.

The recommendations made in SORP – which include valuing derivatives [see 20.11] on a ‘fair value’ basis and using ‘bid price’ rather than ‘mid-market price’ as the appropriate quoted price – affect all DB and DC occupational scheme accounts (and have done since 6 April 2007).













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