Agenda item

Consider report by Director – Finance and Procurement. (To follow.)

4.1       With reference to paragraph 3 of the Minute of the meeting held on 22 June 2023, there had been circulated copies of a report by the Director – Finance and Procurement which provided an opportunity to scrutinise the final Annual Report and Accounts for the Pension Fund for 2022/23 prior to their submission to the Audit Committee and then Scottish Borders Council for signature. Also circulated with the report included the annual Audit Report from Audit Scotland, the annual report, and accounts for the year to 31 March 2023, a letter from Mr John Boyd, Audit Scotland, and a Letter of Representation (ISA 58) from the Director – Finance and Procurement.   The report outlined that the Local Government Pension Scheme Amendment (Scotland) Regulations 2010 specified the elements which must be contained in the Annual Report and Accounts, the list of those were contained in the report. The final Annual Report and Accounts contained in Appendix 1 to the report fully met those requirements. Audit Scotland had completed their audit and had provided an unqualified independent audit opinion.  The Scottish Borders Council’s Pension Fund Annual Audit Report highlighted four new recommendations and followed up one recommendation from previous audits. Actions plans had been agreed for each of the recommendations. The report was presented to members of both the Pension Fund Committee and the Pension Fund Board for them to recommend the final Annual Report and Accounts for 2022/23 (the Annual Report) for approval prior to submission to Scottish Borders Council for signature. 

4.2         The Chairman welcomed Mr Boyd and Ms Stephanie Harold of Audit Scotland to the meeting to present their report.  Mr Boyd expressed his thanks to the Director – Finance and Procurement for her support during the audit process.  It was highlighted that whilst the report was listed as a draft, it would be finalised when the accounts were signed following full approval.  The final version would be then published on the Audit Scotland website. The audit which had been completed had focused on financial management; financial sustainability; vision, leadership, and governance; the effective use of resources to improve outcomes.  Audit Scotland intended to issue an unmodified audit opinion, which indicated that auditors were content that the accounts were free from material misstatements.  The audit which had been carried out was risk-based, which meant that the scope of the audit was based on where there was an identified risk of material misstatement.  Audit Scotland undertook its audit based on materiality, based on a percentage of gross assets.  There were a number of adjustments which were below the reporting threshold and Audit Scotland was comfortable that they remained unadjusted.  Direct testing was undertaken regarding the administration of the Fund regarding new starters and general administrative aspects.  Mr Boyd explained that the Fund was not unique in the context of its declining investment performance and highlighted that wider economic conditions had impacted upon other Local Government Pension Schemes (LGPS) as well.  Regarding the wider financial sustainability of the Fund, it was acknowledged that the Fund was subject to a triennial valuation as at 31 March 2023.  The Fund was reporting a net asset position, which indicated that the value of assets held was higher than actuarial valuation of its liabilities.  That position was consistent with the approach taken by other LGPS across Scotland. Mr Boyd highlighted the importance of vision, leadership, and governance to the Fund.  Ensuring that a robust training programme was in place and followed was essential to the proper management of the Fund.  Mr Boyd stressed that the Committee was unique in its demands, and that Members were required be kept up to date on key developments.   An agreed Action Plan, which included several key aspects of work to be undertaken, was contained within the report.  Good progress had been made following up on the prior year recommendations, and Mr Boyd highlighted the importance of implementing the Stewardship Code and other recommendations. Management had agreed to implement the use of an action tracker to ensure that no actions were not lost.  Members welcomed the report and expressed their thanks to Audit Scotland for undertaking their work.   In response to a question regarding whether there was an issue with Members not completing their required training, Mrs Douglas explained that there were some potential timing issues regarding the completion of training. Training matters were being addressed and a log would be kept, which would ensure that all Members had undertaken the mandated training. 

            DECISION
AGREED to approve to approve the Annual Report and Accounts for 2022/23 for Officer signature and Council approval.