Additional information for 2021/22 audit fees

Impact of additional audit requirements on 2021/22 fees

For the new changes in audit requirements where our research has indicated an additional audit fee will be needed, we have set out below for each key change in requirements the:

• estimated minimum additional fee range for local fee variations; and
• potential factors that could influence the size of individual fee variations.

VFM arrangements commentary (Code of Audit Practice 2020)

The requirements in the Code of Audit Practice 2020 in relation to an audited body’s arrangements to secure value for money have a significant impact on the auditor’s work and require additional fees.

The new approach to this work requires an annual commentary on arrangements to secure VFM, published as part of the auditor’s annual report. The commentary should enable the auditor to explain the work they have undertaken during the year, and to highlight any significant weaknesses that they have identified and brought to the body’s attention, along with their recommendations for improvement.

The expected additional minimum core fees for this work for 2021/22 audits are the same as for the 2020/21 audit year:

Minimum additional fees – new VFM arrangements requirements for 2021/22 audits¹

¹ To be considered on an individual basis, but the general ranges may provide a useful reference

These fee ranges cover the basic core work needed for the VFM commentary and represent the lowest minimum additional fee that may be needed. They do not cover any additional work an auditor will need to undertake where individual risks or specific weaknesses are identified in relation to a body’s value for money arrangements, which need to be reviewed and reported.

Factors that may affect the level of additional fee required at an individual body are set out at Appendix 1.

Further discussion between an opted-body and the appointed auditor should establish the additional fee required for each body.

We will review the fee ranges and the fee variations requested by auditors following completion of the 2021/22 audits. We aim to consolidate the additional fees needed into a future fee scale once we have sufficiently reliable information to do so.

ISA (UK) 540 (Revised) – Auditing accounting estimates and related disclosures

The precise quantum of the impact of the new requirements of ISA 540 will depend on the circumstances of each body. In the absence of elevated risks, the minimum fees below are considered appropriate:

Minimum additional fees – ISA 540

The level of additional fee required is highly dependent on audited body activities and preparedness. Factors that may affect the level of additional fee are set out at Appendix 1.

Once the impact of local circumstances on ongoing additional fees is clear, we will consider consolidation of the additional fees into the fee scale.

Other new requirements

Our research has concluded that it is not appropriate to set an additional fee range for the following new requirements.  The individual fees required need to be discussed locally between the opted-in body and the auditor as part of the fee variations process and approved by PSAA.

New 2020/21 requirements where is it not appropriate to set an additional fee range

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