Frequently Asked Questions

We have chosen not to determine fee variations related to the issuing of a disclaimed opinion until the funding position is resolved. Until that process is complete, we are reviewing all fee variation proposals we receive from auditors but will only determine those not related to the production of a disclaimed opinion. We explained this process in our email of 17 December 2024, sent to all bodies and copied to the firms.

We will communicate the final fee position for each body once we have determined it. Once we determine a fee, it becomes statutorily payable.

The Code of Audit Practice (COAP) sets out what local auditors of relevant local public bodies are required to do to fulfil their statutory responsibilities under the Local Audit and Accountability Act 2014.

Local auditors must comply with the COAP. Para 2.6 requires auditors to apply the extant auditing standards set for the UK by the Financial Reporting Council as the relevant regulatory body and applicable at all audits both corporate and public sector.

The evaluation ratio of 80% quality and 20% price for an audit services procurement is consistent with other recently let public sector audit procurement contracts. It differs from our approach to the 2017 procurement as our market intelligence was that firms would not engage with bodies that did not value audit and used ratios of a low quality/high price rating.

We considered the feedback provided and confirmed our approach to retain the 80% quality and 20% price evaluation ratio in the report summarising the outcome of the June 2021 consultation on the draft prospectus.

The proximity of the backstop dates for the up to 2022/23 and 2023/24 audits means that we will receive fee variation proposals for over 700 audits in a short period. We expect it will take us several months to process them and we are working to ensure we do so thoroughly, effectively and efficiently.

The firms are submitting these fee variation proposals as and when they are ready to do so. We are therefore dependant on them providing these proposals, and appropriate supporting information, to allow us to complete our work.

Work on VFM arrangements comprises two elements:

• the core work to consider the arrangements in place included in the scale fee. The auditor needed to do it to be able to come to the binary conclusion that was in place up to 2019/20; and
• the additional work required to produce the commentary, which is a Code of Audit Practice requirement from 2020/21 and is included in the scale fee from 2023/24.

The VFM arrangements commentary fee variation in the statement may be higher than determined for other audit years. This is due to the fee variation also including the scale fee element for core VFM work. The only fees for these bodies are the VFM arrangements related fees and the fees for issuing a disclaimer opinion, i.e. no separate scale fee charge (please note that we will separately assess fees in relation to audit work in response to elector queries and objections).

Fees for new recurring audit requirements are only consolidated into the scale fee once we have sufficiently reliable information of the ongoing audit work needed. The audit work for ISA (UK) 315 (risks of material misstatement) and linked work on ISA (UK) 240 (fraud) has been included in the 2024/25 scale fees, but we process it as fee variations for 2022/23 and 2023/24 because the Regulations do not allow us to update those scale fees once set, i.e. after 30 November 2022 and 2023 respectively.

The independence requirements for all auditors in the local public audit regime are the same, whether locally appointed or part of the appointing person regime. These requirements are specified by the Financial Reporting Council in the Ethical Standard and applied to local public audit as determined by the NAO.

The services that an auditor can provide are the same whether appointed by PSAA or through local arrangements.

As the Appointing Person, PSAA performs the role otherwise required of an Independent Auditor Panel to advise the body on ensuring the independence of the auditor (Local Audit and Accountability Act 2014 section 10(1)).