[Global Financial Insights] FRC Pension Rule Guidance and ASIC Action

Global Financial Insights is a weekly feature for the Accounts and Audit Module subscribers of Taxmann.com. It provides you with the latest updates on financial reporting and auditing practices from across the globe. Here is this week’s financial update:

1. Financial Reporting Council Issues Guidance on Pension Rule Amendments, Providing Clarity to Actuaries and Scheme Stakeholders

The Financial Reporting Council (FRC) has issued new guidance to support pension scheme actuaries in providing retrospective confirmation to validate historic amendments to pension scheme rules. The guidance responds to situations where past changes to pension benefits or rules were made incorrectly, inconsistently applied, or not properly documented, creating uncertainty in actuarial valuations and financial reporting.

In response, the FRC’s “Technical Actuarial Guidance” provides a practical framework to help actuaries apply professional judgement and strengthen confidence that historic amendments complied with legal requirements.

Further, the guidance offers non-prescriptive, proportionate approaches, including examples to assist actuaries where historic records are incomplete. The FRC clarifies that actuaries should not simply assume that historic practices are valid; instead, they must evaluate whether amendments were effective and how corrections should be reflected in funding assessments and accounting figures. This guidance is expected to enhance consistency, strengthen governance, and improve confidence in pension-related reporting amid increasing scrutiny of legacy pension issues.

Source – Financial Reporting Council

2. ASIC action highlights serious breaches of Independence and Professional Standards by SMSF Auditors

The Australian Securities and Investments Commission (ASIC) has taken regulatory action against 28 self-managed superannuation fund (SMSF) auditors, signalling heightened scrutiny of in-house audit breaches. The action includes the cancellation or suspension of auditor registrations and the imposition of conditions on auditors who failed to meet independence and competency requirements.

ASIC took this action after identifying multiple breaches of professional obligations and auditing standards by SMSF auditors. The key areas of non-compliance included:

(a) failing to comply with auditing and assurance standards, independence and continuing professional development requirements or to hold professional indemnity insurance

(b) failing to provide ASIC with annual statements

(c) failing to advise ASIC of changes to their contact details on the public register of SMSF auditors and not responding to regulatory compliance requests

(d) failing to carry out enough audit work to meet the practical experience requirements

ASIC noted that these failures compromise audit quality and confidence in the SMSF system, and reinforced that auditors must strictly adhere to independence requirements and professional standards.

Source – Australian Securities and Investments Commission

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