Appendix 1
Assumptions and mitigations that may affect the level of additional fee required at an individual body
Code of Audit Practice requirement for a VFM commentary from 2020/21
| Fees will usually be within the proposed range/ at the proposed level if … | Fees will usually be above the proposed range/ proposed level if … | Bodies can reduce the impact on fees by … |
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– No significant weaknesses have been identified in previous audits – Arrangements for financial sustainability, governance and improving VFM are stable – There are no major incidents 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 |
– Significant weaknesses have been identified in previous audits – There have been significant changes in arrangements for financial sustainability, governance or improving VFM – There is a major incident 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 |
– 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 |
ISA 540 (Accounting estimates)
| Fees will usually be within the proposed range/ at the proposed level if … | Fees will usually be above the proposed range/ proposed level if … | Bodies can reduce the impact on fees by … |
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– 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 |
– 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 |
– 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 |