For bodies with only VFM arrangements related fees and the fees for issuing a disclaimer opinion, there will be no separate scale fee charge.
For all other fee variations this will depend on the circumstances of each body.
PSAA must follow the requirements of the Local Audit (Appointing Person) Regulations 2015.
The information we use to set the scale fees includes the previous year’s fees, fee variations that relate to recurrent requirements, and any new audit requirements.
PSAA consults annually on the scale fees. Individual scale fees are published on this website each year once the fee scale is confirmed by our Board following consultation.
We continue to pool scheme costs and charge fees to audited bodies in accordance with our published fee scale as amended following consultations with scheme members and other interested parties. Pooling means that everyone in the scheme accesses the rates secured via our large-scale competitive procurement process, a key tenet of the national collective scheme.
Additional fees (fee variations) are part of the legal framework. They occur if auditors are required to do substantially more or less work than anticipated, for example if local circumstances or the Code of Audit Practice change or if the Regulator (the FRC) increases its requirements on auditors. Our fee variations process ensures that fees for additional work are robustly assessed. Additional fees cannot be invoiced until we determine them.
We have spoken and written often of the systemic issues facing the local audit system in the communications sent to S151 officers and Audit Committee Chairs, and we will continue to do so. We are also an active member of the Local Audit Liaison Committee, chaired by the FRC from May 2023 and attended by key local audit stakeholders. This enables us to feed in body and auditor perspectives to decisions about changes to the local audit framework, and the urgent need to address audit timeliness.
Tony Crawley, PSAA’s Chief Executive, gave evidence at the March 2023 Public Accounts Committee (PAC) enquiry on the timelines of local government audit opinions in England. The transcript of the meeting can be accessed on the PAC’s website. The PAC continues to show an interest in the challenges affecting local audit. Steve Freer, PSAA’s Chair, also shared his thoughts in an article that considered the wider local audit landscape in October 2022.
Our current arrangements for measuring the quality of the delivery of audit services are published. Our approach to tender evaluation for the 2022 audit services procurement reflected those areas which opted-in bodies told us are important to them. We sought input from the FRC in developing our approach. The themes and their weightings are as follows:
Please note that it is the FRC that assesses the quality of the firms’ audit work in line with its statutory responsibilities.
A decision to become an opted-in body must be taken in accordance with the Regulations that is by the members of an authority meeting as a whole, except where the authority is a corporation sole, such as a police and crime commissioner, in which case this decision can be taken by the holder of that office.
The requirement for the Full Council of an authority to make the decision to opt into the PSAA (appointing person) scheme is set out in section 19 of the Local Audit (Appointing Person) Regulations 2015. It is not a matter that is under PSAA’s control.
The opportunity for existing eligible bodies to become an opted-in authority for the appointing period 2023/24 to 2027/28, closed on 11 March 2022. General details about the process for the first two appointing periods can be found at appointing period 2018/19 – 2022/23 or appointing period 2023/24 – 2027/28.
The procurement of audit services for opted-in bodies is a key component of the appointing person arrangements.
Ahead of each audit services procurement PSAA develops and publishes a procurement strategy that is shaped by market conditions and the views of eligible bodies and local audit stakeholders.
Details of PSAA’s previous audit procurements are published on its website: the outcome of its procurement in 2022 for the appointing period 2023/24 to 2027/28, and the outcome of its procurement in 2017 for the appointing period 2018/19 to 2022/23.
There are no direct repercussions for the audited body, but we recognise the problems that delayed audits cause.
The Accounts and Audit Regulations 2015 set out the requirements for publishing accounts. There is a statutory deadline for the publication of audited financial statements, but this is only applicable when the body has audited accounts to publish. As a result, Reg 10(2) provides that where an audit of accounts has not been concluded by the specified publishing date then an authority must publish a notice stating that it has not been possible to publish the statement of accounts and its reasons for this. The wording of the notice is at the discretion of the authority.
We work with firms to improve matters where service has fallen short, but our contractual options are limited. Our aim is to get to a position where we can replace auditors who do not meet the quality measures within our contracts and are not able to resolve the issues. However, this would require a more buoyant market of local audit suppliers than is the case in 2023.
The FRC’s Ethical Standard precludes contracts that contain fees that vary according to a pre-determined measure (for example specifying a date by which an audit opinion must be given). We robustly scrutinise firms’ proposed fee variations for additional work in line with our published process. This includes discussions with individual bodies before making determinations.
If the body is not satisfied with the response of the auditor, then the matter should be raised with PSAA.
As appointing person, PSAA appoints a firm as auditor to an opted-in body. The auditor is responsible for nominating an individual to act as the Engagement Lead on the audit of a body.
PSAA will consider changing an auditor appointment in extreme circumstances if an opted-in body is dissatisfied, but would expect the body and the auditor to have exhausted all avenues for resolution before doing so. Maintaining the independence of the auditor is an important part of this consideration.
PSAA will consider changing an auditor appointment during a five-year appointing period if a conflict of interest involving the existing auditor is identified, or because of the emergence of new joint working arrangements. The appointing person scheme has the flexibility to provide an audit alternative if required in these cases.
PSAA monitors the quality of audit services provided by audit firms through its contract monitoring arrangements.
All relevant authorities listed in schedule 2 of the Local Audit and Accountability Act 2014 (the Act), whether they have opted in or not, are required to comply with Part 3 of the Act in relation to the appointment of local auditors.
Section 7 of the Act requires a relevant authority to appoint a local auditor to audit its accounts for a financial year not later than 31 December in the preceding financial year. For the 2023/24 accounts, a local auditor must have been appointed by 31 December 2022.
Eligible bodies that have chosen not to opt into the appointing person arrangements have two options for appointing their own auditor. These are to:
Both these options require the body to consult and consider the advice of its Auditor Panel on the selection and appointment of a local auditor. Section 9 of the Act requires the establishment of an Auditor Panel, section 10 sets out the functions of an Auditor Panel, and schedule 4 sets out provisions applying to Auditor Panels. An Auditor Panel must consist of a majority of independent members (or wholly of independent members), and must be chaired by an independent member.
A guide to Auditor Panels for local government authorities was issued by CIPFA in 2017.
Within the period of 28 days beginning with the day on which the auditor appointment is made, section 8 of the Act requires a body that has not opted into the national appointing person arrangements to publish a notice that:
The notice must be published on its website or in such manner as the body thinks is likely to bring the notice to the attention of service users.
The terms of the contract through which an auditor is appointed by local arrangements will determine how the service is provided and the remuneration arrangements.
The Ethical Standard issued by the FRC in December 2019 [due to be replaced with the Revised Ethical Standard 2024 by the end of 2024] precludes contingent fees on audit engagements. A contingent fee basis includes any arrangement made at the outset of an engagement under which a specified commission on, or percentage of, any consideration or saving is payable to the firm upon the happening of a specified event or the achievement of an outcome (or alternative outcomes).
Whether an auditor is appointed by PSAA or by local arrangements, the specification of a local audit is fixed. It is determined by the requirements of the:
The framework of the Appointing Person scheme is the relevant legislation, namely the Local Audit and Accountability Act, the Appointing Person Regulations, and Accounts and Audit Regulations.