Email to s151/s73 officers at opted-in bodies, 17 December 2024
I am writing to update you of our current position on audit fees for issuing a disclaimed opinion. Your organisation may not have received a disclaimed audit opinion however I felt it would be useful for you to be aware of this update.
In January 2025, we will start our next cycle of processing fee variation proposals. Many of the proposals will include work that relates to the production of a disclaimed opinion, alongside standard ones.
Our research indicates that across the firms there is not a standard approach to the work needed to produce a disclaimed audit opinion, driven by their respective professional judgement in these unprecedented circumstances, and as a result their costs vary.
We continue our consideration of how best to deal with these cost variations. We are also working with MHCLG to understand the financial impact further and consequent action. Until that process is complete, our intention is to review all fee variation proposals that we receive from the audit firms but will only determine those which are not related to the production of a disclaimed opinion.
Where this situation affects your organisation you may receive interim fee variation statements for an audit year, which we appreciate is less than ideal. In addition, you may receive statements for a later audit year before those for an earlier audit year. To provide clarity, we intend to issue a fees statement to each organisation that receives a backstop disclaimed opinion for audits up to 2022/23, which will cover the period from the first disclaimed audit year through to 2022/23.
Our current thinking is to apply the same approach to those 2023/24 audit opinions where the only work completed is to issue the disclaimed opinion (other than the VFM arrangements and additional powers work).
The proximity of the backstop dates for the up to 2022/23 and 2023/24 audits means that we expect to receive fee variation proposals for around 700 audits in early 2025. We expect that it will take us several months to process them. During this time our availability will be limited. We ask for your patience and want to reassure you that we have heard and understand your concerns about fees for disclaimed audits and are doing all we can to achieve the fairest outcome in these unprecedented circumstances.
I will write to you again when there are further developments.
Yours sincerely,
Tony Crawley, Chief Executive
Public Sector Audit Appointments Limited