This consultation closed on 19 February 2021.
Summary
This consultation invites audited bodies and stakeholders to submit views on PSAA’s proposals for setting the fee scale for the audit of opted-in bodies’ 2021/22 financial statements and value for money arrangements.
Consultees will be aware that auditors and auditing have been subject to very high levels of scrutiny in recent times following a number of widely reported financial failures in the private sector. These events have led the Government to commission a series of reviews into:
- audit regulation (the Kingman Review);
- the audit market (the Competition & Markets Authority Review);
- the quality and effectiveness of audit (the Brydon Review);
- local audit and financial reporting (the Redmond Review).
This consultation takes place against the backcloth of these reviews and in the context of the significant tensions and pressures currently present within the audit market and profession. It is carried out in accordance with the relevant provisions of the Appointing Person Regulations 2015, including the requirement to consult on and set the fee scale before the commencement of the relevant year. This imposes a very challenging timetable given that a great deal of information which would ideally be available to inform the setting of the scale is simply unavailable at this stage.
This consultation document explains how PSAA proposes to calculate the fees which will make up the 2021/22 fee scale. Our proposal involves two key variables: the ongoing implications of fee variations approved in relation to 2018/19 audit work, and the implications of further anticipated developments in relation to auditing and financial reporting standards. We explain in this document how we propose to tackle each of these issues and how we plan to communicate the detailed implications of each to individual bodies.
In theory, a third factor could also apply. Our contracts with audit suppliers include provision for an increase for inflation in relation to their remuneration for 2021/22. However, because the prevailing rate of inflation is currently low, it is unlikely that inflation will impact on 2021/22 fees payable by audited bodies.