BULLETIN 2002/3
GUIDANCE FOR REPORTING ACCOUNTANTS
OF STAKEHOLDER PENSION SCHEMES
IN THE UNITED KINGDOM
NOVEMBER 2002
The
Auditing Practices
Board
Independent Regulation of the Accountancy Profession
The Auditing Practices Board Limited, which is a constituent body of the
Accountancy Foundation, is responsible for the establishment of standards and
guidance for auditing in the United Kingdom and Republic of Ireland with the
objective of enhancing public confidence in the audit process and the quality and
relevance of audit services in the public interest.
The Auditing Practices Board Limited discharges its responsibilities through a Board
(the APB) comprising a mix of individuals who are eligible for appointment as
company auditors, as well as those who are not so eligible. Those who are eligible for
appointment as company auditors may not exceed 40% of the APB by number.
Neither the Auditing Practices Board Limited nor the APB accepts any liability to
any party for any loss, damage or costs howsoever arising, whether directly or
indirectly, whether in contract, tort or otherwise from any action or decision taken (or
not taken) as a result of any person relying or otherwise using this document or arising
from any omission from it.
The purpose of Bulletins issued by the Auditing Practices Board is to provide auditors
and, where relevant, reporting accountants with timely guidance on new and emerging
issues. They are persuasive rather than prescriptive. However, they are indicative of
good practice even though they may be developed without the full process of
consultation and exposure used for Statements of Auditing Standards.
THE AUDITING PRACTICES BOARD
GUIDANCE FOR REPORTING ACCOUNTANTS OF
STAKEHOLDER PENSION SCHEMES IN THE UNITED
KINGDOM
Contents
Paragraphs
Introduction
1-12
Trustees’ or managers’ declarations
13
Reporting Accountants’ procedures
14-23
Reporting Accountants’ reports
24-25
Reporting to the regulators
26-29
Letters of comment
30-35
Appendix 1 : Example report of the Reporting Accountants to the Trustees or
Managers of a stakeholder pension scheme
Appendix 2: Example paragraphs for a Letter of Engagement
Appendix 3 : Regulation 12 of the Stakeholder Pension Schemes Regulations 2000 (As
amended)
Introduction
1. The introduction of Stakeholder pensions was first announced in 1999. Registered
stakeholder schemes were permitted to collect premiums from new members from
April 2001.
2. Stakeholder pension schemes can be set up by trustees (trust schemes) or can be
established by managers (contract schemes). The Occupational Pensions
Regulatory Authority (Opra) has responsibility for maintaining the register of
stakeholder pension schemes, and for the governance of schemes. Under the
regulations Opra cannot register, and must de-register, stakeholder schemes if they
fail to meet the conditions for being a stakeholder scheme set out in legislation.
The Financial Services Authority (FSA) has responsibility for regulating the sales
and marketing of stakeholder pensions, and is also responsible for authorising and
supervising the firms acting as stakeholder managers as well as firms involved in
managing the funds invested in stakeholder schemes.
3. Bulletin 2002/3 has been issued by the APB to provide guidance for reporting
accountants in relation to the requirements placed upon them in connection with
stakeholder pension schemes. It does not constitute guidance from Opra or the
FSA; however the APB acknowledges the advice and assistance provided by Opra
and the FSA during the development of the Bulletin.
4. The principal legislation regulating Stakeholder pensions is The Welfare Reform
and Pensions Act 1999 (‘the Act’) and The Stakeholder Pension Schemes
Regulations 20001 (as amended) (‘the Regulations’). The relevant parts of the
Regulations came into force on 1 October 2000 but have been subject to amending
regulations issued in 2001 and 2002.
5. Regulation 12(2)(a) requires the trustees or manager to make an annual
declaration2 containing various statements. Regulation 12(5)(a) requires a
statement that in the opinion of the trustees or manager there are systems and
controls in place which provide reasonable assurance that:
(i)
(ii)
(iii)
1
Regulations 13 and 143 of the regulations have been complied with in
relation to the scheme;
transactions for the purposes of the scheme in securities, property or
other assets have occurred at a fair market value;
the value of members’ rights has been determined in accordance with
the provisions in the instruments establishing the scheme; and
SI 2000 no.1403.
Regulation 12 of The Stakeholder Pension Schemes Regulations 2000, as amended by Regulation 4
of the Stakeholder Pension Schemes (Amendment No. 2) Regulations 2002, is reproduced in full in
Appendix 3 of this Bulletin.
3
These regulations impose limits on the amount of charges and deductions which may be made by a
stakeholder pension scheme and on the manner in which charges may be made by such a scheme.
2
(iv)
adequate records have been maintained for the purposes of providing
to members the statement required by Regulation 18(2)4 of the
regulations.
6. Regulation 12(5)(b) requires the trustees or manager to provide a statement
describing the process that has been undertaken in order to arrive at the opinion
expressed in the statement required by Regulation 12(5)(a).
7. Regulations 12(5)(c) and (d) require the trustees or manager also to provide
statements concerning compliance with the conditions in section 1(1) of the Act,
and explaining the requirements of Regulations 13,14 and 18(2). Reporting
accountants are not required to review these statements.
8. Regulation 12(6) requires the trustees or manager to provide the reporting
accountant with documentation to demonstrate that the process described in the
statement in accordance with Regulation 12(5)(b) has taken place.
9. Regulation 12(2)(b) requires that the trustees or manager shall obtain from a
reporting accountant5 statements made in accordance with Regulation 12(7) that
(i) the reporting accountant has been provided with documentation as required by
Regulation 12(6); and
(ii) nothing has come to the attention of the reporting accountant that is
inconsistent with the statement made in accordance with Regulation 12(5)(b), or
so far as the reporting accountant is unable to provide such statements, an
explanation as to why he is unable to do so.
In this connection, reporting accountants are required to consider whether the
documentation supports the trustees’ or managers’ description of the process made
in accordance with Regulation 12(5)(b), and whether anything is inconsistent with
that description. However, the reporting accountants are not required to consider
whether the trustees’ or managers’ description of the process covers all relevant
risks and controls, or to reach a conclusion on the adequacy of the process or on
the effectiveness of the controls.
10. The trustees or managers are required by the Regulations to annex the reporting
accountants’ report to their declaration, and shall make the whole document
4
This regulation requires a stakeholder pension scheme to provide an annual benefit statement to each
member.
5
Regulation 11 defines a reporting accountant as follows:
“A person is eligible for appointment as a reporting accountant only if he is eligible (but subject to
paragraph 10) under section 25 of the Companies Act 1989 for appointment as a company auditor”
(Paragraph 10 states that a person is not eligible for appointment as a company auditor if section 34 of
the 1989 Act applies to him (individuals retaining only authorisation granted by the Board of Trade to
audit an unquoted company)). Before accepting appointment, reporting accountants of stakeholder
pension schemes also consider the ethical guidance issued by the accountancy bodies.
available to members and beneficiaries of the scheme on request.
11. It is a condition of a scheme being a stakeholder pension scheme that the
requirements of the Regulations are complied with. Opra, as the relevant
regulator, expects to receive copies of the annual declarations made by the trustees
or managers, together with the reporting accountants’ report. As discussed in
paragraph 30 of this Bulletin, Opra also expects to receive from scheme trustees or
managers copies of reporting accountants’ letters of comment (or, where
appropriate, written confirmations that no letters of comment are to be issued)
which have been submitted to them. This information will assist Opra in meeting
its regulatory responsibilities, and it has indicated that it is likely to pay particular
attention to a scheme where the declaration or report is qualified or where material
weaknesses in internal control come to its attention.
12. Under normal circumstances both the declarations by the trustees or managers and
the reporting accountants’ reports are due 6 months after the end of the scheme
accounting period. In respect of scheme accounting periods ending on or before
30 September 2002, however, there is a transitional provision6 to the effect that
the declarations and reports do not need to be completed until 31 December 2002.
Trustees’ or managers’ declarations
13. As described above, the trustees or managers are required to make statements to
the effect that systems and controls provide reasonable assurance that specified
aspects of the Regulations have been complied with and to describe the process
that has been undertaken to make such statements. Guidance for trustees and
managers to assist them in fulfilling these responsibilities has been issued by the
Pensions Research Accountants Group (PRAG)7. The guidance has been prepared
in consultation with both Opra and the Association of British Insurers (ABI).
Reporting Accountants’ procedures
14. Regulation 11 sets out the process to be followed for the appointment and
resignation of the reporting accountant. The Regulation requires in particular that
reporting accountants acknowledge in writing within one month their receipt of
the notice of appointment, and confirm that they will notify the trustees or
managers of any conflict of interest to which they are subject in relation to the
scheme immediately they become aware of its existence. Reporting accountants
are also required, on resignation, to serve on the trustees or managers a written
6
SI 2002 no. 1480.
“ Making the Annual Declaration - A Guide for Trustees and Managers of Stakeholder Pension
Schemes”. Copies of this guidance may be obtained from PRAG’s website: www.prag.org.uk.
7
notice containing a statement specifying any circumstances connected with the
resignation which in their opinion significantly affect the interests of the members
or beneficiaries of the scheme, or a declaration that they know of no such
circumstances.
15. The objective of the reporting accountants’ review in accordance with Regulation
12 is to obtain evidence to support an assessment of whether the trustees’ or
managers’ description of the process, undertaken to support the statements
required by Regulation 12(5)(a), is supported by the documentation prepared by
or for them and appropriately reflects that process. Before commencing their
review procedures, reporting accountants:
(a) plan the work to be undertaken in relation to the declaration by the
trustees or managers so as to perform that work in an effective
manner;
(b) familiarise themselves with the Stakeholder Pensions Regulations,
particularly those sections governing the preparation of the trustees’
or managers’ declaration;
(c) understand the structure and management of the scheme and its
processing arrangements, including those that are outsourced;
(d) ensure that they comply with the independence guidance issued by
their relevant professional bodies and discuss, where appropriate, with
the trustees or managers any relationships which may affect the
reporting accountants’ independence or their objectivity and any
related safeguards that are in place; and
(e) agree the terms of the engagement with the trustees or managers and
record them in writing. Example paragraphs for a letter of
engagement are set out in Appendix 2 of this Bulletin.
16 Appropriate evidence to support the reporting accountants’ assessment will
usually be obtained by performing the following procedures:
8
(a)
obtaining through enquiry of appropriate individuals an understanding
both of the framework of controls relevant to the legislation referred to
in Regulation 12(5)(a), and the process established by the trustees or
managers for the review of the effectiveness of those controls, to enable
them to arrive at their opinion and sign the declaration;
(b)
enquiring of the trustees or managers whether they are familiar
with, and have considered the applicability to their scheme of,
relevant guidance issued to trustees and managers by PRAG8 and
In addition to the PRAG guidance referred to in paragraph 13, PRAG has also issued non-binding
guidance on possible control procedures entitled “Stakeholder pension schemes – a controls checklist”.
This is also available on PRAG’s website.
Opra9 and, if necessary, recommending that they should so consider
it;
(c)
reviewing relevant minutes of the meetings of the trustees or managers,
and of other committees (for example audit and risk management
committees) together with supporting papers presented at those
meetings;
(d)
enquiring of the trustees or managers whether they are aware of any
instances of non-compliance with the legislation referred to in
Regulation 12(5)(a);
(e)
reviewing any relevant correspondence with regulators, particularly
Opra and the FSA;
(f)
reviewing the documentation prepared by, or for, the trustees or
managers, including any documentation relating to functions outsourced
to a third party, to ascertain that it demonstrates that the process
described in the statement, made in accordance with Regulation
12(5)(b), has taken place;
(g)
enquiring of the audit engagement partner whether any relevant matters
have come to his attention during the audit work (see paragraph 19
below); and
(h)
attending meetings at which the declaration, including the statement
concerning the review process, is considered and approved for signature.
17 Reporting accountants also:
(a) record in their working papers
- details of the engagement planning,
- the nature, timing and extent of the procedures performed in
relation to their report, and the conclusions drawn; and
- their reasoning and conclusions on all significant matters
which require the exercise of judgment;
(b) consider the matters which have come to their attention while
performing the procedures on the declaration and whether they
should result in a qualification to their statement or be included
in a letter of comment to the trustees or managers; and
9
As at the date of issue of this Bulletin, Opra has published an exposure draft of ON 11 – “Stakeholder
pension scheme charges”. Copies may be obtained from Opra’s website – www.opra.gov.uk. ON 6 –
“The right to report problems to Opra” and ON 8 – “Direct payment arrangements by employers”, may
also be relevant to a stakeholder pension scheme.
(c) take steps to ensure that any delegated work is directed,
supervised and reviewed in a manner which provides reasonable
assurance that such work is performed competently.
18.
The reporting accountants may request the trustees or managers to provide written
confirmation of oral representations made during the course of the review.
19.
In most cases reporting accountants of stakeholder pension schemes will also be the
appointed auditors of the managing entity (in the case of contract schemes), or of the
schemes managed by the trustees (in the case of trust schemes). Whilst the reporting
accountants’ assignment is entirely separate from the audit engagement, the partner in
charge of the reporting accountants’ work nevertheless requests the audit engagement
partner to advise him of any breaches of the requirements specified in Regulation
12(5)(a) of which the audit engagement partner has become aware as a result of the
audit.
20.
Reporting accountants are not required to consider whether the trustees’ or managers’
description of the process made in accordance with Regulation 12(5)(b) covers all
relevant risks and controls, or to reach a conclusion on the adequacy of the process or
on the effectiveness of the controls. However they do consider:
•
whether they have been provided with documentation which supports the trustees’
or managers’ description of the process, and
•
whether they have become aware of matters which are inconsistent with the
description of the process,
and, if necessary, they qualify their statement.
21.
Reporting accountants are not required to obtain evidence concerning the specific
requirements underlying Regulation 12(5)(a) - for example that the value of members’
rights has been determined in accordance with the provisions establishing the scheme.
However, if during their review of the trustees’ or managers’ documentation reporting
accountants identify facts or circumstances which suggest that:
•
the trustees or managers may not be justified in their belief that their systems and
controls provide reasonable assurance to enable them to make the statement
required by Regulation 12(5)(a), or
•
because of apparent breaches of the legislation or other matters, the proposed
statement required by Regulation 12(5)(a) is not supportable,
they discuss their concerns with the trustees or managers as soon as is practicable.
22. If as a result of the discussion the reporting accountants remain of the view that
significant internal control weaknesses or other matters exist which, in their opinion,
call into question the credibility of the statement made by the trustees or managers
in accordance with Regulation 12(5)(a), they consider qualifying the statement in
their report in respect of these matters.
23. Under normal circumstances reporting accountants qualify their report in respect of
apparent undisclosed breaches of the legislation referred to in Regulation 12(5)(a) of
which they become aware. In deciding whether to qualify their report in respect of
such breaches, reporting accountants consider their significance. The materiality of
the breach in monetary terms would not be relevant to a consideration of its
significance. However, where breaches have occurred which were identified by the
scheme’s own control systems, which were not indicative of a systemic problem,
and which were corrected subsequently such that there was no monetary impact on
any member or beneficiary of the scheme, then they are unlikely to be significant.
Reporting Accountants’ reports
24.
Reporting accountants’ reports on declarations normally include the following
matters:
•
•
•
a title identifying the persons to whom the report is addressed (which will
normally be the trustees or managers of the scheme);
an introductory paragraph identifying the Regulations which are covered
by the report;
separate sections, appropriately headed, dealing with
-respective responsibilities of the trustees or managers and the
reporting accountants, and
-the basis of the reporting accountants’ statement, including (where
appropriate) a reference to compliance with the guidance in this
Bulletin;
•
•
•
the reporting accountants’ statement on the matters required by the
Regulations;
the signature of the reporting accountants; and
the date of the reporting accountants’ report.
In addition, reporting accountants consider including in their report wording to the
effect that they owe no duty of care to individual beneficiaries of the scheme.
Appendix 1 of this Bulletin sets out an illustrative example of a reporting accountants’
report on the declaration. This example wording may need to be tailored to reflect
particular circumstances.
25.
As indicated in paragraphs 20-23 above, reporting accountants qualify the statement
in their report if:
- they have not been provided with documentation that supports the trustees’ or
managers’ description of the process, or
- they are aware of matters that are inconsistent with the trustees’ or managers’
description of the process, made in accordance with Regulation 12(5)(b), or
- they are aware of matters which call into question the credibility of the
statement made by the trustees or managers in accordance with Regulation
12(5)(a). These matters are likely to be connected with significant internal control
weaknesses, or with breaches of the legislation referred to in Regulation 12(5)(a).
Reporting to the regulators
26.
Reporting accountants of trust schemes have a right to report to Opra10 as described in
Opra Note (ON) 6 : ‘Pensions Act 1995 – the right to report problems to Opra’. ON 6
emphasises that reporting to Opra on a voluntary basis does not breach any normal
duties of confidentiality, providing that the person or firm has been appropriately
appointed by the trustees and there is reasonable cause to believe that a breach of
regulations has occurred which is likely to be of material significance to Opra.
Reporting accountants bear in mind that, if they or their firm are also the scheme
auditors of a scheme established under trust, they have a legal duty under Section
48(1) of the Pensions Act 1995 to report to Opra when they have reasonable cause to
believe that a breach of the regulations has occurred which is likely to be of material
significance to the regulator.
27.
In the case of contract schemes, reporting accountants do not have a similar right to
report matters of which they become aware to Opra. Where, in the course of their
work, reporting accountants become aware of matters which appear to be of material
significance to the regulator, they discuss these with the managers with a view to the
managers making a report to Opra. If, following these discussions the managers do
not make an appropriate report to Opra in circumstances where it appears that they
should, the reporting accountants consider taking legal advice.
28.
Reporting accountants of contract schemes who are also the auditors of the managing
entity consider whether they have a duty to report matters of material significance, of
which they become aware in their capacity of auditors of the managing entity, to the
FSA11 under the FSMA12 2000 (Communications by Auditors) Regulations 2001.
This is because there may be situations where it is not clear whether information
coming to the attention of the reporting accountants is received in that capacity or in
their other role as auditors. Appendix 2 to SAS 620 provides guidance as to how
10
Further guidance on reporting to Opra is set out in Bulletin 2000/2 – Supplementary guidance for
auditors of occupational pension schemes in the United Kingdom.
11
Further guidance on reporting to the FSA is set out in Bulletin 2001/6 – Supplementary guidance for
auditors of insurers in the United Kingdom following ‘N2’.
12
The Financial Services and Markets Act.
information obtained in non-audit work may be relevant to the auditors in the
planning and conduct of the audit and the steps that need to be taken to ensure the
communication of information that is relevant to the audit.
29.
In general, if reporting accountants are in any doubt as to whether a report should be
made to the regulator or not, they consider taking legal advice.
Letters of comment
30.
Opra expects trustees or managers to include a copy of any letter of comment from
the reporting accountants with their annual declaration and the reporting accountants’
report when these are submitted to it.
31.
As indicated in paragraph 25 above, if the reporting accountants consider that
significant weaknesses in internal control or other matters exist which call into
question whether the trustees’ or managers’ statements made in accordance with
Regulations 12(5)(a) and (b) are justified, they qualify the statement in their report.
32.
If, however, the reporting accountants are of the opinion that control weaknesses or
other matters exist, but these do not affect the credibility of the statement made by the
trustees or managers in accordance with Regulation 12(5)(a), they report them in a
letter of comment to the trustees or managers.
33.
Where no significant weaknesses in the scheme’s internal control systems come to
their attention during the review, the reporting accountants advise the trustees or
managers in writing that no letter of comment is to be issued.
34.
Because letters of comment issued by reporting accountants will be submitted to
Opra, trustees or managers will normally wish to have the opportunity of responding
in writing to the comments made. Reporting accountants agree with the trustees or
managers the way in which their responses are to be presented. These discussions
should not, however, be allowed to cause an unreasonable delay in submitting the
letter of comment.
35.
Reporting accountants of contract schemes bear in mind that they have no right to
report directly to Opra as they have a duty of confidentiality to the scheme managers.
Should Opra wish to discuss the contents of a letter of comment it should
communicate with the managers in the first instance. In some circumstances Opra
may also wish to discuss the letter of comment with the reporting accountants: in this
case Opra agrees with the managers and the reporting accountants beforehand the
basis upon which these discussions are to be held.
APPENDIX 1
Example report of the Reporting Accountants to the Trustees or
Managers of a stakeholder pension scheme
The Trustees/Managers of the XYZ pension scheme,
Address.
XYZ STAKEHOLDER PENSION SCHEME
We report in accordance with the requirements of Regulation 12(7) of the
Stakeholder Pension Schemes Regulations 2000 (as amended) (the Regulations),
concerning the annual declaration by the trustees/managers of the XYZ pension
scheme. The declaration is made in respect of the period of 12 months ended on
xxxx.
Respective responsibilities of the trustees/managers and the reporting accountant
In accordance with Regulation 12(2)(a) the trustees/managers are responsible for the
preparation of a declaration, which contains a statement describing the process that
the trustees/ managers have undertaken, in order to arrive at their opinion as to
whether systems and controls are in place which provide reasonable assurance that
specified regulations in relation to stakeholder pensions have been complied with.
It is our responsibility to consider whether documentation has been provided to us to
support the trustees’/managers’ description of the process and to report if this is not
the case. We also report if anything has come to our attention that is inconsistent with
the description of the process.
We are not required to consider whether the trustees’/managers’ description of the
process made in accordance with Regulation 12(5)(b) covers all relevant risks and
controls, or to reach a conclusion on the adequacy of the process or on the
effectiveness of the controls or to undertake any work in this regard.
(Reporting accountants consider including wording to the effect that they owe no duty
of care to individual beneficiaries of the scheme)
Basis of reporting accountant’s statement
We conducted our work in accordance with Bulletin 2002/3 ‘Guidance for reporting
accountants of stakeholder pension schemes in the United Kingdom’ issued by the
Auditing Practices Board. The work performed involved making enquiries of
management and staff and examination of the documentary evidence supporting the
existence of the process.
Statement
(Other than the Exception set out below)13 In accordance with Regulation 12(7) we
report that in our opinion:
•
we have been provided by the trustees/managers with documentation, which is
required by Regulation 12(6) to demonstrate that the process described in the
trustees’/managers’ statement has taken place; and
•
nothing has come to our attention that is inconsistent with the trustees’/
managers’ description of the process.
(Exception
The trustees’/managers’ description concerning … does not appropriately reflect our
understanding of the process undertaken by you because…..”)
Reporting accountants
Date
13
In cases where there are no exceptions, the wording in italics would be omitted.
Address
APPENDIX 2
Example paragraphs for a Letter of Engagement
The purpose of this letter is to set out the basis on which, in accordance with the
requirements of Regulation 12(7) of the Stakeholder Pension Schemes Regulations
2000 (as amended), we are to act as the Reporting Accountant of the [scheme] (“the
Scheme”) and the respective areas of responsibility of the trustees/managers and of
ourselves.
Duties of trustees/managers
As the trustees/managers of [stakeholder provider] you are responsible for the design,
implementation and maintenance of control procedures that provide adequate levels of
protection for Members’ assets and records and to ensure that the Scheme has
complied with the provisions of the Stakeholder Pension Schemes Regulations 2000
as amended (“the Regulations”).
Under Regulation 12(2) of the Regulations you are required to make a declaration in
writing containing the statements set out in Regulation 12(5), to provide us with
documentation to demonstrate the process you have described, and obtain from us the
statements specified in Regulation 12(7). It is our responsibility to examine the
documentation supporting the statements required in the declaration and report our
conclusion to you.
Scope of work
In accordance with Regulation 12(7) we are required to report to you that:
(i) we have been provided with documentation as required by Regulation 12(6);
and
(ii) nothing has come to our attention that is inconsistent with the statement made
by you in accordance with Regulation 12(5)(b), or
so far as we are unable to provide such statements, an explanation as to why we
are unable to do so.
The work we shall perform will be conducted in accordance with the framework set
out in the Bulletin 2002/3 – ‘Guidance for reporting accountants of stakeholder
pension schemes in the United Kingdom’, issued by the Auditing Practices Board.
Our work will include enquiries of management and staff and examination of the
documentary evidence supporting the existence of the processes. Our work will be
planned in advance. In developing our plan we shall liaise with you to ensure that our
work is properly coordinated.
We are not required to consider whether the trustees’/managers’ description of the
process made in accordance with Regulation 12 (5)(b) covers all relevant risks and
controls, or to reach a conclusion on the adequacy of the process or the effectiveness
of the controls.
Use of our report
Our report will be addressed to you as trustees/managers of [stakeholder provider].
We consent to the disclosure of a copy of the report to the Occupational Pensions
Regulatory Authority (“Opra”) and to the members and beneficiaries of the Scheme
on request on the basis that we will not accept any liability/responsibility to those
parties or to any other party to whom our report is shown or into whose hands it may
come.
You agree not to use our report, or make references to it, in material disseminated to
the general public without our express written permission. In any cases where
marketing literature is prepared and where you may wish to refer either to us or our
report, you will seek our consent to those references in advance. We reserve the right
to refuse in either of the above cases.
Limitations of work
Control procedures are subject to inherent limitations and, accordingly, errors or
irregularities may occur and not be detected. Such procedures cannot guarantee
protection against fraudulent collusion, especially on the part of those holding
positions of authority or trust. Furthermore, our statements will be based on historical
information, and the projection of any information or conclusions contained in our
statements or your declaration to any future periods is subject to the risk that changes
in procedures or circumstances may alter their validity.
Reports to management
Our work is restricted to an examination of the documents provided and the
statements describing the process undertaken by management in order to give them
reasonable assurance that the rules identified under Regulation 12(5)(a) had been
complied with. Therefore our work is not designed to identify significant weaknesses
in the Scheme’s system of internal controls. However, we shall report to management
in writing in a letter of comment any significant weaknesses in the Scheme’s system
of internal controls which come to our notice during the course of our work, and that
we consider should be brought to management's attention. Where no such matters
have come to our attention we shall confirm this to you in writing.
Our examination is only performed to the extent required to express an opinion on
these statements, and therefore our comments on these systems will not necessarily
address all possible improvements which might be suggested as a result of a more
extensive special examination.
We consent to you making such reports available to Opra on the basis that we will not
accept any liability/responsibility to that party or to any other parties.
No such report may be provided to any other third parties without our prior written
consent. Such consent will be granted only on the basis that such reports are not
prepared with the interests of anyone other than the trustees/managers in mind and
that we accept no duty or responsibility to any other party. We reserve the right to
withhold our consent.
APPENDIX 3
Regulation 12 of The Stakeholder Pension Schemes Regulations 2000
(as amended by The Stakeholder Pension Schemes
(Amendment No. 2) Regulations 2002)
Requirement for declaration by trustees or manager
12.—(1) For the purposes of section 1(1)(b), it shall be a condition of a scheme being a
stakeholder pension scheme that the requirements of this regulation are complied with.
(2) Subject to paragraph (11), the trustees or manager of the scheme shall, no later than the
end of 6 months beginning with each reporting date—
(a)
make a declaration in writing signed by the trustees or manager containing the
statements set out in paragraph (5) in relation to the reporting period or, in so far
as they are unable to make those statements containing a statement explaining
why they are unable to do so; and
(b)
obtain from the reporting accountant appointed by virtue of regulation 11 the
statement specified in paragraph (7) or, in so far as the reporting accountant is
unable to make that statement, a statement from the reporting accountant
explaining why he is unable to do so.
(3) Subject to paragraph (10), in this regulation reporting date means—
(a)
in the case of the first reporting date, a date chosen by the trustees or manager
that is no later than the last day of the period of 12 months beginning with the
date on which the scheme is registered under section 2 of the Act; and
(b)
in the case of each subsequent reporting date, a date chosen by the trustees or
manager that is no later than the last day of the period of 12 months beginning
with the date immediately following the previous reporting date.
(4) Subject to paragraph (10), in this regulation reporting period means—
(a)
in the case of the first reporting period, the period beginning with the date of
registration of the scheme under section 2 of the Act and ending on and including
the first reporting date;
(b)
in the case of subsequent reporting periods , the period beginning on the date
immediately following the previous reporting date and ending on and including
the reporting date.
(5) The statements specified in paragraph (2)(a) shall be—
(a)
a statement that in the opinion of the trustees or manager there are systems and
controls in place which provide reasonable assurance that —
(i) regulations 13 and 14 have been complied with in relation to the scheme;
(ii) transactions for the purposes of the scheme in securities, property or other
assets have occurred at a fair market value;
(iii) the value of members’ rights has been determined in accordance with the
provisions in the instruments establishing the scheme; and
(iv) adequate records have been maintained for the purposes of providing to
members the statement required by regulation 18(2);
(b) a statement describing the process that the trustees or manager have or has
undertaken in order to arrive at the opinion expressed in the statement described
in paragraph (5)(a);
(c) a statement that in the opinion of the trustees or manager there are systems and
controls in place which provide reasonable assurance that the scheme has
complied with the conditions in section 1(1) of the Act, apart from those
conditions that are covered by the statement in paragraph (5)(a); and
(d) a statement which explains that—
(i) regulations 13 and 14 impose limits on the amount of charges and
deductions which may be made by a stakeholder pension scheme and on the
manner in which charges may be made by such a scheme; and
(ii) regulation 18(2) requires a stakeholder pension scheme to provide an annual
benefit statement to each member.
(6) The trustees or manager shall provide the reporting accountant with documentation to
demonstrate that the process described in the statement in paragraph (5)(b) has taken place.
(7) The statement specified in paragraph (2)(b) shall be a statement that—
(a)
the reporting accountant has been provided with documentation as required by
paragraph (6); and
(b)
nothing has come to the attention of the reporting accountant that is inconsistent
with the statement made in paragraph (5)(b).
(8) The trustees or manager shall make available to members and beneficiaries of the
scheme on request the declaration made by the trustees or manager and the statement
obtained from the reporting accountant in accordance with paragraph (2).
(9) If the statement to be obtained by the trustees or manager under paragraph (2)(b) is
obtained from the reporting accountant acting as such while ineligible in contravention of
regulation 11(7A)(a)—
(a)
the trustees or manager shall not be regarded as having complied with paragraph
(2)(b); and
(b)
for the purposes of paragraph (8), the statement from the reporting accountant
shall not be regarded as obtained in accordance with paragraph (2)(b).
(10) Where a scheme is registered under section 2 of the Act on or before 6th April
2001—
(a)
the first reporting date shall be 5th April 2002; and
(b)
the first reporting period shall be the period commencing on and including 6th
April 2001 and ending on and including 5th April 2002.
(11) Where the reporting date is on or before 30th September 2002 the trustees or manager
of the scheme shall make the declaration specified in paragraph (2)(a) and obtain the
statement specified in paragraph (2)(b) from the reporting accountant—
(a)
on or before 31st December 2002; or
(b)
by the end of 6 months beginning with the reporting date,
whichever is later.
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