The Pensions Research Accounting Group (PRAG) has updated their guidance around going concern considerations following changes made in the most recent version of ISA (UK) 570. The adjustments mainly clarify the role of the auditor in a pension scheme’s assessment of going concern.
The main points arising from the changes are:
- Clarifications to the risk assessment process. Auditors are required to perform a risk evaluation which will gain a better understanding of scheme’s processes relating to the going concern review.
- More work to be performed by the auditor to potentially challenge and question a scheme’s going concern assessment, requesting additional evidence where appropriate.
- Adjustments to the audit report to conclude on the going concern concept applied to that specific scheme
The existing guidance already requires trustees to undertake an assessment on going concern, so this should not add too much additional work for trustees. However, what this can mean is that auditors may ask for further evidence on the work that has been completed during this assessment and what steps have been taken to be comfortable that the correct treatment has been applied.
Assure UK are already ahead of the curve having enhanced our work on going concern over the past few years. We look to build more on this following the guidance update. We already work well with our existing trustees to perform this review and strive to keep this process just as efficient going forward.
Members can find more information on PRAG’s website. These changes are applicable for periods commencing on or after 15 December 2019, so look out for this on your upcoming audit.