Representatives from the external auditor, KPMG presented the external auditor’s Value for Money Risk Assessment for the year ended 31 March 2025 and gave a verbal update on the audit status for the 2024/25 audit.

Richard Lee, Director at KPMG and engagement lead, gave a positive overview explaining that there were no financial sustainability concerns and no significant risks identified regarding governance or risk and no significant risks regarding improving economy, efficiency and effectiveness and that this position was not expected to change.

Members noted that the report doesn’t identify any areas for cost saving and asked if this meant SYPA was unable improve efficiency.

Richard Lee explained that benchmarking showed that SYPA’s administration costs were below those of peer administering authorities and so it does not have a risk associated with cost saving. It was explained that SYPA do identify areas to improve economy, efficiency and effectiveness but that it has limited opportunity to enact cost saving measures due to its size and nature.

The Director added that the Authority takes its responsibility to steward scheme member money seriously and it ensures it spends no more than necessary to run the scheme. He added that SYPA were always looking for ways to do things more effectively and efficiently, such as removing duplication of work, and will continue to look for opportunities to cost save while managing the increasing membership.

Members noted that the external auditors had identified that within the Q3 Corporate Risk Register there were 3 risks relevant to VFM considerations and asked whether any work had been done to look at these 3 risks (Local Pension Board and Authority members knowledge and understanding, high levels of staff vacancies and single person risk in specialist knowledge roles).

Richard Lee explained that the role of external audit was to assess risk by reviewing activity, reports and registers rather than investigating specific risks already identified by SYPA and added that arrangements to mitigate and reduce the risks to an appropriate level were already in place internally.

The Assistant Director - Resources added that it was a key strand of internal audit to look in detail at how the Authority was dealing with identified risks and the Head of Corporate Assurance explained that they do provide independent risk management assurance.

Richard Lee gave a verbal report on progress to the Authority and the Fund audits. It was explained that the vast majority of work had been completed on the Authority audit and that the Fund audit was progressing well with no significant issues or concerns identified as yet. He explained that it was the second year of KPMG working with SYPA and positive developments to fully understand and support SYPA continued.

Elizabeth Wharton, Senior Manager at KPMG, agreed that the Fund audit was progressing well and explained that they had a clear list of required information for the third party investment manager confirmations that are outstanding and that this work was going as expected.

RESOLVED: Members received and noted the external auditor’s value for money risk assessment for the year ended 31 March 2025, attached at Appendix A and noted the verbal update on the audit status for the 2024/25 audit.