This edition of our quarterly e-bulletin includes news of our new Chair, our response to consultations to address the audit backlog, an update relating to fee variation proposals for the revised ISA 315, and a summary of local audit news from elsewhere.
We hope that you continue to find our e-bulletin to be useful. We welcome your thoughts on future topics that you would like us to cover (contact the team).
Content:
- New PSAA Chair appointed
- PSAA responds to the DLUHC and NAO consultations
- First milestone payment for 2023/24 audits with auditor continuity
- Proposed fee variation for ISA 315 from 2023/24
- PSAA’s Advisory Panel meeting
- Annual Audit Quality Monitoring Report for 2023
- Local audit news from elsewhere
New PSAA Chair appointed
On the 1 March we announced the appointment of our new Chair, Bill Butler, who took up the role on 1 April 2024. We look forward to working with Bill. The LGA issued a press release detailing the appointment.
Our Board and staff extended our sincere thanks to Steve Freer, our outgoing Chair, for his immense contribution and dedication to PSAA’s work since our incorporation in 2014.
PSAA responds to the DLUHC and NAO consultations to address the Local Audit Backlog in England
In early February 2024 DLUHC and the NAO launched consultations on proposals to tackle the audit opinion backlog.
PSAA has:
- Responded to DLUHC’s consultation on addressing the Local Audit Backlog in England. This consultation sought views on amending the Accounts and Audit Regulations 2015 as part of a package of cross-system measures to clear the backlog and put the system on a sustainable footing.
- Responded to the NAO’s consultation on changes to the Code of Audit Practice. This consultation was to support auditors to meet backstop dates and promote more timely reporting of their work on value for money arrangements.
- Hosted a webinar for s151 Officers and Audit Committee (and equivalent) Chairs that provided an opportunity to air thoughts and seek clarification ahead of the consultations’ deadline. The webinar was hosted by Steve Freer with panellists from DLUHC, the NAO, the FRC and PSAA; we were pleased to welcome over 130 delegates.
First milestone payment for 2023/24 audits with auditor continuity
Our contracts for the audits from 2023/24 to 2027/28 pay auditors when they deliver work milestones. When we developed the contracts we expected the Auditor’s Annual Report (AAR) to be the conclusion of the auditor’s work. We therefore made the auditor issuing the 2022/23 AAR the trigger for the first milestone payment for the 2023/24 audit fee where the auditor was unchanged from the previous year.
However, the local audit system is currently deciding on the timing and audit work required to close the remaining elements of financial statement audits. In this uncertain environment we have taken a pragmatic decision that the delivery of the VFM arrangements commentary for all years up to 2022/23 is a suitable milestone to trigger the first payment for 2023/24 (where the auditor was unchanged from the previous year).
Further details can be found on our website or contact us at feevariations@psaa.co.uk.
Proposed fee variation for ISA 315 from 2023/24
When we published the 2023/24 scale fees we explained that we were unable to consolidate the fee requirements of the updated ISA 315 into the scale fees. The update applies to 2022/23 and increases the audit work needed to deliver a Code compliant audit, but the backlog meant that we had very little data on its impact.
We publish our fees research every year as part of our fee consultation preparation process. Our 2024 research will cover the impact of ISA 315 including a review of 2022/23 fee determinations and discussions with other bodies.
Details can also be viewed on our website or please email our team with any queries.
PSAA’s Advisory Panel meeting
Our Advisory Panel of Treasurers’ Societies members met on 23 February 2024.
Iain Murray, Director of Public Financial Management at CIPFA, was the key speaker. He provided a sector update including the recent additional funding from DLUHC to provide training for finance professionals; CIPFA’s plan to engage in discussions with Treasurers’ Societies; and CIPFA’s intention to publish a consultation on measures to assist dealing with the audit backlog (see local audit news section below).
During the meeting we sought Panel feedback on two topics to shape our future work:
- Delivery of free training to introduce new s151 Officers and Audit Committee Chairs to PSAA’s role.
- How we might evolve our approach to the annual client survey, such as: sending the survey within two months of each organisation’s opinion delivery (rather than issuing it at the same time to all) and the potential to incorporate focus groups to seek feedback, alongside a survey.
We would welcome your feedback on these two topics as well as other ideas or suggestions. You can share feedback with us via email at generalenquiries@psaa.co.uk.
The meeting also covered developments in the sector including the consultations launched by DLUHC and the NAO in response to the backlog of local audits, our 2023 Audit Quality Monitoring Report, audit delivery information, and a summary of local audit news.
Annual Audit Quality Monitoring Report for 2023
We produce an annual Audit Quality Monitoring Report covering the work of our contracted audit firms. The report focuses on the three headline indicators of compliance: professional regulation, client satisfaction, and contractual compliance.
The annual report for 2023 is available to read on our website.
Local audit news from elsewhere
The Local Audit Liaison Committee (a committee comprising key stakeholders, reinforcing the governance arrangements, and to support the regulator on the development of local audit) met on 10 April. DLUHC commit to publish minutes for these meetings, which are available to view.
On 25 March the FRC published its plan and budget for 2024/25.
CIPFA launched its consultation on short term England-only measures in the Code of Practice on Local Authority Accounting on 29 February. The proposals are to aid the recovery of local authority reporting and audit as set out in a Joint Statement from DLUHC and other system partners issued in February 2024. The consultation closed on 28 March 2024.