Frequently Asked Questions

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  1. If we have opted into the PSAA scheme, what is the impact of a Local Government Reorganisation or a change to the structure of our council?

    When an authority ceases to exist they are automatically removed from our scheme in line with the Regulations. The decision to opt in is not binding on the new authority which is free to make its own decision.

    If an authority decided not to accept the opt-in invitation for the appointing period 2023/24 to 2027/28 before the closing date of 11 March 2022, then it must wait until after April 2023 before it could opt in. It therefore may need to make local arrangements for appointing auditors.

  2. In addition to the Code of Audit Practice requirements set by the NAO, do PSAA’s contracts include the audit of wholly owned companies and group accounts?

    Local authority group accounts are part of the accounts produced under the CIPFA Code of Practice on Local Authority Accounting and are subject to audit in line with the NAO Code of Audit Practice. They continue to be part of the statutory audit for which PSAA makes an auditor appointment for opted-in bodies.

    Local authority companies are not listed in the Local Audit and Accountability Act as bodies subject to audit under that act. Company audits are subject to the provisions of the Companies Act 2006 and are not covered by the Local Audit (Appointing Person) Regulations 2015 or the scope of PSAA’s specification as the appointing person.

    Local authority companies must appoint an auditor themselves in accordance with Companies Act legislation. They can appoint the same audit firm as PSAA appoints to undertake the principal body audit should they wish, for example where this could support an efficient audit process.

    The historical requirement to obtain approval for the auditor appointment to a company under the Local Authorities (Companies) Order 1995 no longer applies. The appointment of the company auditor is a matter for the local authority’s governance arrangements, informed by any guidance that CIPFA has produced.

  3. In terms of sustainability and as a contingency, is the option of a public sector supplier similar to the former District Audit Service being considered?

    There are numerous very significant hurdles to creating a public sector auditor and addressing them is not in PSAA’s gift.

    There are only nine firms in England registered to undertake local audit and three of these firms did not bid. Unlike other parts of the UK, in England there is no auditor of last resort (or in-house provision), so we are wholly reliant on the market. We are calling for urgent change to move the local audit system to a more sustainable footing which may allow greater confidence and optimism as we approach the next procurement in five years’ time.

    We have made public statements that the local audit market is failing, and we are actively calling for reform in response to the challenges that local audit is facing including:

  4. In what circumstances can an auditor be changed during the five-year appointing period, and how does this differ from locally procured arrangements?

    The main circumstances in which PSAA will consider changing an auditor appointment during the five-year appointing period are:

    • for independence reasons, such as the identification of a conflict of interest involving the existing audit firm;
    • the emergence of new joint working arrangements where the appointment of the same auditor to all partners would be beneficial; or
    • where there had been an irretrievable relationship breakdown would also be considered.

    An eligible body appointing its own auditor may find it more difficult to change their auditor during the contracted period, not least because it would require undertaking a new selection and procurement exercise. It is important to note that regardless of who makes the appointment only firms registered to provide local audit can be appointed.

  5. Is there an issue with the contract management being at one step removed under the PSAA regime, which is perhaps the price for the benefits of centralised procurement?

    The local audit framework, the respective roles of the different players, e.g. the FRC, the NAO, ICAEW, CIPFA, DLUHC and PSAA, and the nature of public audit means that any contract for the delivery of a code-compliant local audit will be different to a normal services contract.  PSAA (or local bodies) cannot specify the audit work or its depth, and by necessity local auditors are independent once appointed.

  6. Our audit is delayed as the auditor has overrun in their NHS work. Can the deadlines for health and local government be extended?

    We have called for co-ordination of audit deadlines by government departments, but these deadlines are set by DHSC and DLUHC respectively.

  7. Our current auditor disagreed with the approach taken by the previous auditor creating a large amount of work in terms of cost, time and effort. How does this work efficiently or even reliably?

    Once appointed, auditors are independent and the decisions that they take are down to their professional judgements. There may be differences in judgement between years by individuals from the same firm as views change or where more evidence becomes available.

  8. The fee variation process takes a long time. What is PSAA proposing to do to improve this?

    PSAA has a robust process to review all fee variations submitted. The process is carried out diligently in line with the expectations of the Local Audit (Appointing Person) Regulations 2015 (Regulation 17(2)). PSAA is conscious that when a determination is made it is legally binding on both an auditor and the audited body, and that it is public money being transacted. This can take some time, especially as the balance between scale fees and the volume of additional fees was never envisaged to be as it is now. It has brought in additional capacity to help process the increased volume.

    Other factors include that firms can take time to submit variations and supporting information, and arranging a meeting with the body can sometimes take a while to achieve.

    The process is not protracted if information provided by the auditor is sufficient to enable PSAA to comply with its statutory duties in assessing a fee variation. A change in February 2022 to the Local Audit (Appointing Person) Regulations enables the scale fee to be set in November, closer to the start of audit work the following year. This should lead to a reduction in the number of audits that require scale fee variations. If necessary, in the case of significantly protracted audits we can approve interim fee variations.

  9. We are a new body created after the opt-in period closed, can we join the scheme?

    A newly established eligible body has the right to opt in by giving notice to PSAA.

    An eligible body who was invited to join but declined only has the right to request to become an opted-in authority.

    The notice must confirm the body’s decision to opt in, and must specify the body’s postal address. The body will become an opted-in authority for the remainder of the appointing period on the date the notice is received by PSAA.

    New bodies which meet the definition of smaller authority (s6 of the Local Audit and Accountability Act 2014) where the higher of the authority’s annual gross income and expenditure does not exceed £6.5m, fall within the arrangements of the Smaller Authorities Audit Appointments Limited.

  10. We have a joint committee which no longer has a statutory requirement to have an external auditor but has agreed in the interests of all parties to continue to engage one. Is it possible to use PSAA’s national scheme to procure the external auditor for the joint committee?

    The requirement for joint committees to produce statutory accounts ceased after production of the 2014/15 accounts and they are therefore not listed in Schedule 2 of the Local Audit and Accountability Act 2014.

    Joint committees that have opted to produce accounts voluntarily and obtain non-statutory assurance on them need to make their own local audit arrangements as they are not eligible to join the PSAA scheme.