Schedule of Professional Services - Academies: Teachers' Pension EOYC


TEACHERS’ PENSIONS END OF YEAR CERTIFICATE - AGREED-UPON PROCEDURES (ACADEMIES)

The purpose of this schedule to our engagement letter is to set out the basis on which we are to provide an independent reporting accountant’s report of factual findings and exceptions in respect of the Teachers’ Pensions End of Year Certificate (EOYC) for the year ended 31 March 2017 to the trustees of the academy trust and Teachers’ Pensions.

1. EOYC AGREED-UPON PROCEDURES

1.1 Teachers’ Pensions have adopted the pre-agreed standardised terms of engagement included within Reporting Accountant Guidance TP05 (FY16/17 Version 4). A copy of the pre-agreed standardised terms of engagement is attached to this letter (Appendix 1C(a)). Teachers’ Pensions accepts and agrees that an engagement between the academy trust, its reporting accountant and Teachers’ Pensions is formed when the academy trust appoints, by way of a signed engagement letter, a reporting accountant in respect of form EOYC under Teachers’ Pensions’ guidance TP05 and in accordance with the International Standard on Related Services (ISRS) 4400.

1.2 We will report to Teachers’ Pensions in accordance the pre-agreed standardised terms of engagement included within Reporting Accountant Guidance TP05 (FY16/17 Version 4) and in accordance with ISRS 4400. Teachers’ Pensions will not be required to sign this engagement letter.

1.3 Our engagement will be conducted in accordance with the pre-agreed standardised terms of engagement. Amongst other areas, the pre-agreed standardised terms of engagement set out the responsibilities of the academy trust and establish the scope of our work and the format of our report.

1.4 In planning and conducting our engagement, we will also have due regard to other relevant professional guidance and requirements, including the FRC’s Ethical Standard and ISRS 4400.


APPENDIX  – TP05 (FY16/17 VERSION 4) PRE-AGREED STANDARDISED TERMS OF ENGAGEMENT

The following wording is taken from Appendix 2 of Reporting Accountant Guidance TP05 (FY16/17 Version 4).

Illustrative terms of engagement

The following are the pre-agreed standardised terms of engagement on which Teachers’ Pensions (TP) engages with reporting accountants to perform an “agreed-upon procedures” engagement and report in connection with “Reporting Accountant Guidance TP05 (FY16/17)” on the Employer’s TP End of Year Certificate (EOYC) annual submission to TP for the period ended 31 March 2017.

TP accepts and agrees that an agreement between the employer, its reporting accountants and TP on these terms is formed when the employer appoints, by way of a signed engagement letter, a reporting accountant to complete an “agreed-upon procedures” engagement in respect of form EOYC under TP’s guidance TP05 and in accordance with International Standard on Related Services (ISRS) 4400. These terms are in lieu of signing a tri-partite engagement letter with the employer and the reporting accountants, and should be attached to and form part of the separate letter of engagement between the employer and reporting accountants.

The “agreed-upon procedures” report (“the report”) should take the form of that set out in Appendix 3 of TP05.

In these terms of engagement:

TP’ refers to the body that is responsible for administering the contributory pension scheme known as The Teachers’ Pension (TP); in this case Teachers’ Pensions on behalf of the Department for Education (DfE).

Employer’ refers to the organisation that is required to make and deduct teacher pension contributions from relevant teachers and pay these over to the TP.

Responsible Finance Officer(s)’, where reference is made to the Responsible Finance Officer this is the Officer who is either the Section 151 Officer (LAs), the Board, the Chief Finance Officer or other relevant senior member of staff who has financial responsibility and delegated authorisation rights for the employer. A payroll officer for example would not hold relevant seniority, nor is it appropriate to delegate completion or responsibility for the EOYC for example to outsourced payroll providers. Responsibility for the accurate completion of the EOYC, contributions paid and deducted remain with the employer.

Reporting accountants’ are the appropriately qualified and independent accountants appointed by the employer for the purpose of reporting on the EOYC. In this capacity, whilst qualified to act as independent external reporting accountants, the appointed reporting accountants act as a professional accountant undertaking an “agreed-upon procedures” engagement in accordance with TP’s TP05 guidance arrangements and ISRS 4400;

For independent schools, a ‘suitably qualified person’ is an independent qualified accountant with CIMA, ACCA, CIPFA or ICAEW qualification. Alternatively, it can be a governor (other than an employee) who is a retired Bursar or Finance Director.

For all other bodies, the reporting accountants will be those registered under Companies Act 2006 and/or Local Audit and Accountability Act 2014. Independent or independence means individuals who are independent within the meaning of the FRC’s Ethical Standard.

An ‘agreed-upon procedures engagement’ is performed in accordance with International Standard on Related Services (ISRS) 4400. It is an engagement in which reporting accountants is engaged to carry out those procedures to which the accountants, the entity and any appropriate third party have agree to and to report on the factual findings. The recipients of the report form their own conclusions on the report. The report is restricted to those parties who have agreed to the procedures to be performed since others, unaware of the reasons for the procedures, may misinterpret the results.

‘Underlying records’ are the accounts, data and other working papers held by the employer or others on its behalf supporting entries on the EOYC return.

1. INTRODUCTION

1.1 The employer is required to submit to TP an EOYC (the original return) as set out in Clause 2 below. The employer appoints the independent reporting accountants to perform the procedures set out in the TP05 and as set out in Clause 3 below. The independent reporting accountants will submit the employer’s final EOYC with their signed accountants’ report directly to TP. These terms of engagement set out the basis on which the accountants will sign their report.

2. THE EMPLOYER’S RESPONSIBILITIES

2.1 The employer is responsible for completing the EOYC, maintaining proper records complying with the terms of any legislation or regulatory requirements and TP Regulations, and providing relevant information to TP and the reporting accountants on a basis in accordance with the requirements of TP. The employer is responsible for ensuring that the non-financial records can be reconciled to the financial records and the accuracy of the EOYC submission, and meeting the requirements of the TP Regulations.

2.2 The management of the employer will make available to the reporting accountants all records, correspondence, information and explanations that the accountants consider necessary to enable the accountants to perform the accountants’ work.

2.3 The employer and TP accept that the ability of the reporting accountants to perform their work effectively depends upon the employer providing full and free access to the financial and other records and the employer shall procure that any such records held by a third party as are necessary for the purposes of the procedures described in the TP05 guidance are made available to the accountants.

2.4 The reporting accountants accept that, whether or not the employer meets its obligations, the accountants remain under an obligation to TP to perform their work with reasonable care. The failure by the employer to meet its obligations may cause the accountants to be unable to perform certain procedures, which will be set out in the accountants’ report.

2.5 The Responsible Financial Officer is responsible for the completion of the EOYC in accordance with relevant TP guidance and for ensuring that the information in the EOYC is accurate.

3. SCOPE OF THE REPORTING ACCOUNTANTS’ WORK

3.1 The employer will provide the reporting accountants with such information, explanations and documentation that the accountants consider necessary to carry out their responsibilities. The reporting accountants will seek written representations from management where the specified procedures require the testing of matters for which independent corroboration is not available. The reporting accountants will also seek confirmation that any significant matters of which the accountants should be aware have been brought to the accountant’s attention.

3.2 The reporting accountants will carry out an “agreed-upon procedures” engagement in accordance with ISRS 4400 on the EOYC as set out in the TP05 guidance by performing the procedures set in Appendix 1 and will produce a factual findings report in the form set out in Appendix 3 and in accordance with Clause 4. TP is solely responsible for determining whether the scope of the agreed-upon procedures is sufficient for its purposes, and the form the report will take.

3.3 The reporting accountants will not subject the information provided by the employer to checking or verification except to the extent expressly set out in the agreed-upon procedures in Appendix 1. The agreed-upon procedures do not constitute an audit or review conducted in accordance with generally accepted auditing or review standards, the objective of which would be the expression of assurance on the contents of the EOYC. Accordingly, such assurance will not be expressed. If such additional procedures were performed or the reporting accountants had performed an audit or review of the EOYC in accordance with generally accepted auditing standards, other matters may have come to their attention that would be reported to the employer and TP. While the reporting accountants will perform their work with reasonable skill and care, the accountants’ work should not be relied upon to disclose all misstatements, fraud or errors that might exist.

4. FORM OF THE ACCOUNTANT’S REPORT

4.1 The reporting accountants’ report is to be prepared on the following bases:

4.1.1 The reporting accountants’ report is prepared solely for the confidential use of the employer and TP and solely for the purpose of submission to TP in connection with the TP requirements set out in “Reporting Accountant Guidance TP05 (FY16/17)” for the EOYC. They may not be relied upon by the employer or TP for any other purpose.

4.1.2 Without imposing on the reporting accountants any duty or responsibility (assuming or being perceived as assuming) and without imposing or accepting any liability to anyone except the employer and TP, TP may disclose the report to others who demonstrate statutory rights of access to the report.

4.1.3 Neither the employer, TP nor others may rely on any oral or draft reports the reporting accountants provide. The reporting accountants accept responsibility to the employer and TP for the accountant’s final signed report only.

4.1.4 The report will be prepared solely for the confidential use of TP and the employer, and solely for the purpose of reporting factual findings on the EOYC return in accordance with TP05. The report shall not be copied, referred to or disclosed, in whole or in part (save as otherwise permitted by agreed written terms), without the reporting accountants’ prior written consent.

4.1.5 To the fullest extent permitted by law, except for the employer and TP, the firm of reporting accountants, its partners and staff neither owe nor accept any duty to any person (including, without limitation, any person who may use or refer to any of TP publications) and shall not be liable for any loss, damage or expense of whatsoever nature which is caused by any person’s reliance on the reporting accountants‟ work or reports.

4.1.6 Clause 3.3 refers to the form of report. In the reporting of issues, as a minimum the reporting accountants should provide sufficient information by setting out the facts of the issue identified, cross reference to the EOYC and relevant TP05 guidance requirement, values and description to permit TP to make a decision on any subsequent action in relation to the employer for this scheme.

4.1.7 Factual findings set out within the report by the reporting accountant should set out the nature and value of any errors to TP, confirming whether or not these have been amended on the EOYC, in line with the guidance issued by TP. Employer explanations will be obtained and reported where exceptions are noted, with formal management representation in relation to the exceptions.

5. LIABILITY PROVISIONS

5.1 The reporting accountants will perform the engagement with reasonable skill and care and accepts responsibility to the employer and Teachers’ Pensions for losses, damages, costs or expenses (“losses”) caused by its breach of contract, negligence or wilful misconduct, subject to the following provisions:

5.1.1 The reporting accountants will not be responsible or liable if such losses are due to the provision of false, misleading or incomplete information or documentation or due to the acts or omissions of any person other than the reporting accountants, except where it would have been reasonable for the accountants to discover such defects in the course of performing the agreed-upon procedure tests.

5.1.2 The reporting accountants accept liability without limit for the consequences of their own fraud and for any other liability which it is not permitted by law to limit or exclude.

5.1.3 Subject to the previous paragraph (5.1.2), the total aggregate liability of the accountant whether in contract, tort (including negligence) or otherwise, to the employer and TP, arising from or in connection with the work which is the subject of these terms (including any addition or variation to the work), shall not exceed the amount determined in accordance with the capping formula shown below. Reporting accountants shall maintain professional indemnity insurance cover commensurate with a claim of this size and nature.

Amounts being reported
on, in this return:
Proportion of amount Total cap
 Up to £1m  100%  Amount included in return
 Between £1m and £5m  100% of first £1m
+ 50% of remainder
 £1m + 50% of amount in
excess of £1m
 Between £5m and £15m  100% of first £1m
+ 50% of amount between
£1m and £5m + 20% of remainder
Negotiate
£3m + 20% of amount in
excess of £5m

 Above £15M    Negotiate

Note - TP will negotiate the comparatively rare returns above £15m on an individual basis and reporting accountants should contact TP via the email address shown in the guidance in advance of agreeing their engagement letter with their client to discuss such cases.

5.2 The employer and TP agree that they will not bring any claims or proceedings against any individual partners, members, directors or employees of the reporting accountants. This clause is intended to benefit such partners, members, directors and employees who may enforce this clause pursuant to the Contracts (Rights of Third Parties) Act 1999 (“the Act”). Notwithstanding any benefits or rights conferred by this agreement on any third party by virtue of the Act, the parties to this agreement may agree to vary or rescind this agreement without any third party’s consent. Other than as expressly provided in these terms, the Act is excluded.

5.3 Any claims, whether in contract, negligence or otherwise, must be formally commenced within 2 years after the party bringing the claim becomes aware (or ought reasonably to have become aware) of the facts which give rise to the action and in any event no later than 4 years after relevant report was issued (or, if no report was issued, when the accountant accepted the engagement in writing). This expressly overrides any statutory provision which would otherwise apply.

5.4 This engagement is separate from and unrelated to the reporting accountants’ audit work on the financial statements or any other work or reviews of the employer for the purposes of any applicable statutory or regulatory or other auditing framework and nothing herein creates obligations or liabilities regarding the reporting accountants’ audit work or audit reports which would not otherwise exist.

Updated October 17

 

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