The national scheme, through its collaborative approach, saves the time and expenses associated with establishing and maintaining an independent auditor panel to oversee the procurement and ongoing management of local auditor arrangements.
The 2022 procurement of audit services took place against the challenging backcloth of a troubled audit profession, a turbulent market and a local audit system that is facing unprecedented difficulties including large volumes of delayed audit opinions. Recruitment, retention and regulatory risks are persistent concerns for suppliers.
We secured sufficient capacity to meet the sector’s needs through to audits of 2027/28 accounts, though the procurement was challenging. The outcome of the procurement is likely to result in an unavoidable major re-set of fees for the audits of 2023/24 (which are due to be set in Autumn 2023) of around 150% on the total fees for 2022/23. We appreciate that such an increase will pose a significant funding challenge for local bodies already facing a daunting range of financial pressures.
In England, unlike other parts of the UK, there is no auditor of last resort (or in-house provision) so we are completely dependent on the market for our supply.
In response to the well documented audit-related challenges of the past few years (Carillion etc.), the market responded to our 2022 procurement with significantly increased prices. We have a statutory duty to appoint an independent auditor to all opted-in bodies so we have to rely on the market. We will continue to call for significant reform of the local audit system in England.
The results of the process, announced on 3 October 2022 involve the award of the following contracts:
- Lot 1 (value: approx. £6.3 million per audit year) awarded to Grant Thornton (UK) LLP;
- Lot 2 (value: approx. £5.775 million per audit year) awarded to Mazars LLP;
- Lot 3 (value: approx. £4.9 million per audit year) awarded to Grant Thornton (UK) LLP;
- Lot 4 (value: approx. £4.2 million per audit year) awarded to Ernst & Young LLP;
- Lot 5 (value: approx. £2.8 million per audit year) awarded to Ernst & Young LLP;
- Lot 6 (value: approx. £2.8 million per audit year) awarded to KPMG LLP;
- Lot 7A (value: approx. £0.350 million per audit year) awarded to Mazars LLP;
- Lot 7C (value: approx. £0.525 million per audit year) awarded to Bishop Fleming LLP;
- Lot 7D (value: approx. £0.175 million per audit year) awarded to Azets Audit Services Limited;
- Lot 8 (value: approx. £1.75 million per audit year) awarded to Mazars LLP;
- Lot 9 (value: approx. £2.1 million per audit year) awarded to KPMG LLP;
- Lot 10 (value: approx. £1.4 million per audit year) awarded to Grant Thornton (UK) LLP;
- Lot 11 (value: approx. £0.7875 million per audit year) awarded to Azets Audit Services Limited;
- Lot 12 (value: approx. £0.7875 million per audit year) awarded to Bishop Fleming LLP; and
- Lot 13 (value: approx. £0.175 million per audit year) awarded to Azets Audit Services Limited.
Contracts were awarded within each Lot to the most economically advantageous tender, with 80% of the available score awarded to quality and 20% awarded to price. The quality of responses was assessed against the following criteria: audit approach (10 marks), audit delivery – quality assurance and capability (25 marks), audit delivery – resourcing and capacity (20 marks), communications (20 marks) and social value (5 marks). Aligned with the Government’s plan that the ARGA become the local audit system leader, we sought the FRC’s input in developing our approach.
Local government, police and fire bodies in England that are not currently opted into PSAA’s scheme from 2023/24 to 2027/28 can request to join at any time after 1 April 2023.