The Barking and Dagenham Pensions Committee has reviewed the audit plan for the 2025/26 financial year, presented by auditors Grant Thornton. The committee met on Tuesday, June 30, 2026, to examine the plan, which details the auditors' strategy for scrutinizing the pension fund's accounts. The meeting documents can be found here.
Grant Thornton has stated they are actively working to resolve issues identified in the previous year's audit, which led to a disclaimer of opinion. The disclaimer of opinion for the year ended 31 March 2025 was primarily due to a scope limitation arising from the local audit backstop, which restricted the time available for audit work. This prevented the auditors from obtaining sufficient appropriate audit evidence over opening balances, including historic balances carried forward. Specific outstanding procedures included obtaining confirmations from Federated for Money Market Funds to complete audit work on Cash and Cash Equivalents, completing procedures over opening balances, and testing the completeness and accuracy of membership data disclosed in the financial statements as at 31 March 2025 and provided for the 31 March 2022 triennial valuation.
The resolution of these issues is a key focus for the 2025/26 audit. The auditors are working to obtain outstanding third-party confirmations, including those for Money Market Fund holdings, to resolve the prior-year scope limitation in the area of Cash and Cash Equivalents. The successful completion of this work is critical for enabling a move away from a disclaimer of opinion. For the current financial year, the auditors anticipate achieving a qualified audit opinion, contingent on the availability of sufficient and appropriate audit evidence. To move from a potential qualified opinion to a cleaner opinion, Grant Thornton requires the timely provision of complete and reliable information, including outstanding cash confirmations. They also need to ensure no new scope limitations arise and no additional significant issues are identified during the audit.
The audit plan specifically identifies key risks, such as the valuation of 'level 3 investments' and the disclosure of the actuarial valuation of defined benefit liabilities. Level 3 investments are considered a significant accounting estimate based on unobservable inputs, which inherently carries a risk of material misstatement due to error or fraud. Their valuations lack observable inputs and require a significant degree of judgment to determine their fair value at year-end. This is a key risk due to the size of the balance and the sensitivity of the estimate to changes in key assumptions.
The disclosure of the actuarial present value of promised retirement benefits (defined benefit liability) as at March 2026 is also identified as a significant risk. This disclosure is derived from the outcomes of the most recent triennial valuation as at 31 March 2025, which determines employer contribution rates and forms the baseline for actuarial assumptions. The triennial valuation relies on member data, and any inaccuracies or omissions in this data have the potential to materially affect the reported pension liabilities over multiple financial years. The audit response includes testing the accuracy and completeness of member data provided to the actuary.
The auditors have commenced their work and will conduct testing throughout the year, with a final report anticipated by the close of November. The audit plan indicates that interim sampling and testing were completed in April and June, with final audit work planned from September to November. The committee will have the opportunity to engage with Grant Thornton regarding their findings at a subsequent meeting.