Introduction
PSAA is committed to working with all parties to achieve the aim that the audits that we commission meet the standard required by the local audit system, whilst recognising that our role is limited to being the specified appointing person for relevant local government authorities under the Local Audit (Appointed Person) Regulations 2015.
We work within the local audit system arrangements, so on audit quality we liaise closely with the FRC as both incoming system leader of the local audit system and as the regulator that oversee the quality of auditors’ work to deliver Code of Audit Practice compliant audits.
Our approach to audit contract quality monitoring is grounded in the International Auditing and Assurance Standards Board’s (ISAAB) framework for Audit Quality.
We have taken the attributes the IAASB framework expects to be present in a quality audit and distilled them into three areas:
- adherence to professional standards and guidance (where we will draw on the assessments carried out by FRC and the ICAEW’s QAD);
- compliance with contractual requirements; and
- relationship management.
While responsibility for providing a quality audit rests ultimately with an auditor, audit quality, efficiency and effectiveness are shared responsibilities. They are key concerns for appointed auditors and audit firms; for chief finance officers (CFOs) and audit committees; for regulatory and supervisory bodies; for the Comptroller & Auditor General (C&AG) and the National Audit Office (NAO); and for Government. The FRC as regulator has the role of monitoring and enforcement aligned to its purpose to serve the public interest by promoting high standards of financial reporting, governance and audit.
The IAASB framework notes that all parts of the financial reporting supply chain have a role in contributing to and encouraging an audit environment that supports provision of an audit service of the expected quality.
Quality of service delivery formed a core part of the evaluation of tenderers’ responses in our audit services procurement, with tenderers encouraged to have regard to the IAASB framework.
Ongoing contract monitoring arrangements have the dual purpose of reporting for opted-in bodies and ensuring that we meet our statutory requirements under the Local Audit (Appointing Person) Regulations 2015 to monitor compliance of auditors against the obligations in the audit contracts.