We wrote to all firms on 18 December 2024 to explain our approach to audit fees for issuing a disclaimed audit opinion arising from the Government’s backlog solution, as we expected to receive their proposals from January 2025 onwards for this work.
Our research showed that the firms’ approaches to the work to produce a disclaimed audit opinion varied, driven by their respective professional judgement in these unprecedented circumstances. The direct consequence of this situation is that firms are incurring different costs to deliver the work they judge that they need to deliver the Code of Audit Practice requirements.
Our work is continuing with MHCLG to find the most appropriate solution to how the audit work done in good faith by the audit firms will be funded, as per the Cross-System statement of July 2023 (para 17) and the Joint Statement of February 2024 (para 36). Alongside that we are reviewing all fee variation proposals that we receive from the audit firms but will not conclude our determination of fee proposals for issuing a disclaimed opinion related to the backlog solution until the funding position is resolved.
Following our assessment of a fee variation proposal including an element for a disclaimed audit opinion related to the backlog solution, we will send the relevant body an interim fee variation statement for that audit year which states that element is yet to be determined. If a body disagrees with our assessment, they can contact us prior to us making a determination. Once we have determined a fee it is statutorily payable.
The determination of audit fees is a matter for PSAA alone – this means that your auditor will not invoice you for a fee variation until authorised by us. This also means that auditors cannot determine whether or not a refund is due, nor can they issue bodies with a refund where one is due until we authorise them to do so. Details of how to contact us are set out on the fee variation statements that we issue.
We re-iterate our continued ask for your patience and want to reassure you that we understand your concerns about fees for disclaimed audits. We are doing all we can to achieve the fairest outcome in these unprecedented circumstances.