27th July 2018 Anne-Marie Winton comments in The Actuary on the FRC’s investigation into pension scheme audit failures
Nearly half of audit inspections carried out by the Financial Reporting Council (FRC) in 2017/18 found problems in the way pension schemes’ valuations are reported.
In a new report, the watchdog said valuations are made complex by the existence of multiple pension arrangements and risk transactions, such as partial buy-outs and longevity swaps.
Anne-Marie Winton said the real issue is that firms with defined benefit schemes are not obliged to disclose ongoing liabilities or the larger solvency or buy-out deficit.
“The deficit figure in the accounts could be the tip of the iceberg,” she continued.
“While this is not a case of false representation under current accounting standards, key information about the risk to the company is not being included in its financial statements.”
Read Anne-Marie’s comments in The Actuary
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