Additional information for 2023/24 audit fees

Appendix 1: Assumptions and mitigations that may affect the level of additional fee required at an individual body

ISA (UK) 240 – The auditor’s responsibilities relating to fraud in an audit of financial statements

Fees will usually be within the proposed range/at the proposed level if…

• No significant weaknesses have been identified in previous audits
• Arrangements are stable
• There are no major incidents in the year
• The body has provided good documentation to support arrangements
• The body has provided timely, relevant and comprehensive responses to audit queries

Fees will usually be above the proposed range/proposed level if…

• Significant weaknesses have been identified in previous audits
• There have been significant changes in arrangements
• There is a major incident in the year
• There are weaknesses in internal control
• Documentation to support arrangements is weak
• Responses to audit queries are delayed and/or inadequate

Bodies can reduce the impact on fees by…

• Implementation of effective internal controls and in particular:
  • clear documentation of arrangements for prevention, detection and investigation of fraud
  • established arrangements for reporting of suspected frauds by employees and other parties
  • established arrangement for investigation of fraud
  • assurance over the operation of arrangements for prevention, detection and investigation of fraud
• Effective engagement with the audit process through:
  • high quality risk assessment overseen by the Audit Committee
  • timely responses to auditor enquiries
  • prompt notification of actual or potential frauds to the auditor

ISA (UK) 250 – Consideration of laws and regulations
in an audit of financial statements

Fees will usually be within the proposed range/at the proposed level if…

• No significant weaknesses have been identified in previous audits
• Arrangements are stable
• The body has provided good documentation
• The body ensures good communication with the auditor

Fees will usually be above the proposed range/proposed level if…

• Significant weaknesses have been identified in previous audits
• There have been significant changes in arrangements
• Documentation is unclear
• Inadequate communication with the auditor

Bodies can reduce the impact on fees by…

• Effective leadership by the Monitoring Officer in:
  • identifying relevant law and regulations
  • documenting arrangements for compliance
  • advising the auditor on a timely basis of actual or potential breaches of law and regulations

ISA (UK) 315 – Identifying and assessing the risks of
material misstatements

Fees will usually be within the proposed range/at the proposed level if…

• The body has a well-documented assessment of inherent and control risks for assertions relating to transactions, balances and disclosures
• The body does not have inherent risks for assertions relating to transactions, balances and disclosures that are unusual for the type of body in question
• The body has clear documentation of the controls for assertions relating to transactions, balances and disclosures (including controls over journal entries, general IT controls and application-specific IT controls)
• There are no significant changes in the controls for the assertions relating to transactions, balances and disclosures (including controls over journal entries, general IT controls and application-specific IT controls)
• The body does not have a history of weaknesses in internal controls relevant to assertions relating to transactions, balances and disclosures
• No significant weaknesses in internal controls relevant to assertions relating to transactions, balances and disclosures are identified relevant to the year of audit

Fees will usually be above the proposed range/proposed level if…

• The body does not have a well-documented assessment of inherent and control risks for assertions relating to transactions, balances and disclosures or the assessment is incomplete and/or out of date
• The body has inherent risks for assertions relating to transactions, balances and disclosures that are unusual for the type of body in question
• The body does not have clear documentation of the controls for the assertions relating to transactions, balances and disclosures (including controls over journal entries, general IT controls and application-specific IT controls) or the documentation is incomplete and/or out of date
• There are significant changes in the controls for the assertions relating to transactions, balances and disclosures (including controls over journal entries, general IT controls and application-specific IT controls)
• The body has a history of weaknesses in internal controls relevant to assertions relating to transactions, balances and disclosures
• Significant weaknesses in internal controls relevant to assertions relating to transactions, balances and disclosure are identified relevant to the year of audit

Bodies can reduce the impact on fees by…

• Preparing and keeping up to date a well-documented assessment of inherent and control risks for assertions relating to transactions, balances and disclosures
• Preparing and keeping up to date clear documentation of the controls for assertions relating to transactions, balances and disclosures (including controls over journal entries, general IT controls and application-specific IT controls)
• Promptly responding to and addressing any weaknesses in internal controls relevant to assertions relating to transactions, balances and disclosures
• Implementation of effective internal controls and in particular:
  • comprehensive documentation of controls over transactions, account balances and disclosures
  • comprehensive documentation of IT controls, including general IT controls

ISA 540 (Accounting estimates)

Fees will usually be within the proposed range/at the proposed level if…

• No significant weaknesses have been identified in previous audits
• No material accounting estimates other than for property, plant and equipment, pension liabilities and local taxation revenue
• Arrangements for preparation of material accounting estimates are stable
• The body has appropriately instructed experts to support them in preparing accounting estimates
• They have validated the information provided to experts
• They have considered the advice of experts and documented clearly the reasons for the approach that they have adopted in respect of material estimates
• Any weaknesses in internal control relevant to material accounting estimates are minor
• The body has provided good documentation to support material accounting estimates
• The body has provided timely, relevant and comprehensive responses to audit queries
• Timely and effective responses to interim reporting

Fees will usually be above the proposed range/proposed level if…

• Significant weaknesses have been identified in previous audits
• There are material accounting estimates other than for property, plant and equipment, pension liabilities and local taxation revenue
• There have been significant changes in arrangements for preparing material accounting estimates
• Experts have not been instructed or inadequately instructed in respect of material accounting estimates
• Information provided to experts has not been validated
• There is no documented consideration of the advice offered by experts and the reasons for the material estimates chosen
• There are weaknesses in internal control relevant to material accounting estimates other than of a minor nature
• Documentation to support accounting estimates is weak
• Responses to audit queries relating to accounting estimates are delayed and/or inadequate
• There are circumstances that require consideration of non-standard reporting in respect of accounting estimates
• Delayed and/or ineffective responses to interim reporting

Bodies can reduce the impact on fees by…

• Implementation and high-quality monitoring of implementation of agreed actions in response to previous audits
• Early and open engagement on changes in arrangements for preparation of accounting estimates
• Engagement and appropriate instruction of experts in respect of accounting estimates
• Validation of information provided to experts in respect of accounting estimates
• Documentation of their consideration of advice offered by experts in respect of accounting estimates and the reasons for material estimates chosen
• Preparation of high-quality documentation to support material accounting estimates
• Establishment of effective arrangements for responding to audit queries
• Effective arrangements for timely and comprehensive consideration of interim reporting
• Implementation of effective internal controls and in particular:
  • systematic documentation of estimates by reference to criteria in the auditing standard
  • early engagement of appropriate experts where in-house expertise is not available
  • preparation of appropriate, relevant instructions by reference to the financial reporting framework
  • demonstrable quality assurance of data used for preparing estimates
  • evidence review of estimates by senior officers and audit committee or equivalent

ISA (UK) 600 – Special considerations – audits of group financial statements

Fees will usually be within the proposed range/at the proposed level if…

• No significant issues have been identified in previous audits
• Arrangements are clear and stable
• There is good liaison with subsidiaries

Fees will usually be above the proposed range/proposed level if…

• Significant issues have been identified in previous audits of group or subsidiaries
• There have been significant changes in group structure
• Liaison with subsidiaries is weak

Bodies can reduce the impact on fees by…

• A documented assessment of the group boundary
• Clear leadership of the accounts preparation process, including timetable
• Liaison with subsidiaries so that there is:
  • alignment of accounting policies and year ends where possible
  • an understanding of the respective roles of the auditors of the parent and subsidiaries
  • complete and timely responses to queries from the group auditor

VFM arrangements commentary

Fees will usually be within the proposed range/at the proposed level if…

• No significant weaknesses have been identified in previous audits or planning
• Arrangements for financial sustainability, governance and improving VFM are stable
• There are no major issues in the year
• The body has made only limited use of complex, unusual or innovative arrangements for service delivery (e.g. outsourcing, joint ventures, controlled companies, pooled budgets)
• Any weaknesses in internal control are minor
• Comprehensive and balanced description of arrangements for financial sustainability, governance and improving VFM in Annual Governance Statement
• The body has provided good documentation to support arrangements in most areas
• The body has usually provided timely, relevant and comprehensive responses to audit queries
• Timely and effective responses to interim reporting

Fees will usually be above the proposed range/proposed level if…

• Significant weaknesses have been identified in previous audits or planning
• There have been significant changes in arrangements for financial sustainability, governance or improving VFM
• There is a major issue in the year
• The body has entered into complex, unusual or innovative arrangements for service delivery
• There are weaknesses in internal control other than of a minor nature
• Limited and/or balanced description of arrangements for financial sustainability, governance and improving VFM in Annual Governance Statement
• Documentation to support arrangements is weak
• Responses to audit queries are delayed and/or inadequate
• There are circumstances that require consideration of interim reporting
• There are circumstances that require consideration of statutory reporting
• Delayed and/or ineffective responses to interim reporting

Bodies can reduce the impact on fees by…

• Implementation and high-quality monitoring of implementation of agreed actions in response to previous audits
• Early and open engagement on changes in arrangements and proposed complex, unusual or innovative arrangements for service delivery
• Preparation of high-quality, comprehensive and balanced description of arrangements for financial sustainability, governance and improving VFM in Annual Governance Statement
• Preparation of high-quality documentation to support arrangements
• Establishment of effective arrangements for responding to audit queries
• Effective arrangements for timely and comprehensive consideration of interim reporting
• Implementation of effective internal controls and in particular:
  • maintenance of high quality, up-to-date documentation of internal controls
  • appropriate documentation of support for, challenge in making, and reasons for major decisions
  • effective communication and dialogue with the external auditor
• Implementation of an effective system of financial management and in particular:
  • maintenance of high quality, up-to-date documentation of risks and associated mitigation, including for risks relating to complex arrangements
  • clear documentation of the financial implications of other plans and initiatives
  • effective communication and dialogue with the external auditor
• Implementation of an effective performance management framework and in particular:
  • evidenced consideration of comprehensive performance management reports covering all relevant areas
  • effective communication and dialogue with the external auditor

Back to top