July 2023 update

This edition of our quarterly e-bulletin includes our recent webinar with Neil Harris Director of Local Audit, news from the Local Government Minister on action to address the backlog of local government audit opinions, and news of our consultation on 2023/24 audit scale fees.

We hope that you continue to find our e-bulletin to be useful. We welcome your thoughts on future topics that you would like us to cover (contact the team).

Yours sincerely

Tony Crawley, Chief Executive, PSAA


Local Government Minister Lee Rowley at the LUHC Select Committee

On 17 July, Minister Rowley attended the latest LUHC Select Committee hearing for its inquiry into Financial Reporting and Audit in Local Authorities. The Committee has published the letter that the Minister sent in advance committees.parliament.uk/publications/40932/documents/199432/default/, which includes the latest position on proposals to address the significant backlog of local government audits in England. The letter explained that there will be further work and engagement across the local audit system over the Summer.

Our webinar with Neil Harris, Director of Local Audit at the FRC

Our 3 July webinar with Neil Harris attracted over 250 delegates. Neil offered reassurance that significant work is underway and there is Government commitment to address the issues. Neil fielded a range of questions and took suggestions on actions to help address the backlog. We expect to publish the full Q&A in the coming weeks, and we will incorporate the Minister’s letter (see above) into the responses. Neil also committed to a follow-up webinar when the details of the proposed solution are available.

Annual Client Survey for 2021/22 audits

In March we invited finance directors and audit committee chairs to share their views on their most recent audit. This survey is an important part of our Quality Monitoring and Reporting Framework. We commissioned the LGA’s Research and Information team to manage the survey process to ensure independence and transparency. We are grateful to the large numbers of Directors of Finance and Audit Committee Chairs (over 350) who took the time to complete it.

The results reflected the current crisis in local audit delivery. As in previous years respondents expressed their concerns about the factors leading to delays in audit opinions: the shortage of experienced auditor resources; the extent of the audit work now required on property and pension valuations; the levels of additional review and scrutiny that firms are building into their process in response to regulatory challenge; and the format and complexity of the accounts produced under the current CIPFA/LASAAC code. The delays intrinsically create their own problems. Respondents noted the adverse impact of changes to audit team membership as well as the difficulties of an extended post-balance sheet period.

We will discuss the survey’s themes and improvement areas with the firms’ local government leads. This includes individual firm feedback and comments to enable local level development of ways of improving relationship management and monitoring progression.

PSAA will continue to raise the concerns expressed with key stakeholders to inform the decisions made on the future of the local audit regime.

We expect to publish the results on our website by the end of July.

Consultation on the fee scale for 2023/24 audits

Looking ahead, from Thursday 7 September 2023 we will be consulting on the 2023/24 fee scale for audits of opted-in bodies. The consultation will run for four weeks, closing on Friday 6 October.

All consultation feedback will be considered carefully by the PSAA Board before confirming the fee scale. We will publish the final fee scale with a summary of our response to the consultation on our website on Thursday 30 November 2023. We will also write to opted-in bodies and other stakeholders to confirm the fee scale.

All opted-in bodies will receive an email at the launch of the consultation, with details of the proposed fee scale and a reminder of the closing date. Details of the consultation will also be available on our website.

Additional information to support local fee discussions on the 2022/23 audit

In September we will be publishing additional information to support local discussions between opted-in bodies and auditors about fee variations for 2022/23 audits.

PSAA’s Advisory Panel meeting

Our Advisory Panel of Treasurers’ Societies members met on 12 June 2023.

Iain Murray, Director of Public Financial Management at CIPFA, attended as a key speaker. He provided an update on the work being carried out by key local audit stakeholders to address the existing backlog of audits.

The meeting also covered an update on developments in the sector including our annual client survey for 2022, a look ahead at the 2023/24 scale fee, audit delivery information, and a summary of local audit news.

The next meeting of the Panel is scheduled for 30 October 2023.

Independent review of our preparations for the second appointing period

In May we appointed Touchstone Renard to undertake an independent lessons learned review of our work to develop the scheme for the audits from 2023/24 with a specific focus to:

The review will seek to capture both what worked well and whether there are alternative approaches that may have yielded improved outcomes. It will also make recommendations on how PSAA might practically apply the learning to both its day-to-day work and our approach to the work to prepare for the third appointing period.

The review is progressing to plan. You should have received a survey seeking your views and asking if you are willing to participate in a follow-up interview. The information gathering phase will conclude during August.

If you don’t recall receiving this email and would like to contribute your views, please email Phil Austin paustin@TouchstoneRenard.com

New PSAA website launch

Our new website was launched in late June. One of the main improvements is that audit related information can be accessed according to the related audit year. This is relevant to the audit and fees, and contract monitoring sections of the website.

You can visit the audit and fees area to find out more about auditor appointments and scale fees, as well as the fee variations process.

The contract monitoring section includes the annual audit quality report and client surveys, and quarterly reports. It also provides details of our Terms of Appointment and statement of responsibilities.

Our quarterly expenditure and procurement data can now be found within the transparency area of the website. This is in the about us section that tells you more about PSAA and our appointing person role.

All our latest news, e-bulletins, events and publications can be found on our homepage which provides an easy to view summary of current news and updates.

As the website has only recently been launched, please bear with us as we continue to update areas and improve your user experience.

We would welcome your feedback on the website – please email the team.

Local audit news from elsewhere

On 23 June the Public Accounts Committee published a report on the Timeliness of local auditor reporting. The Committee asked DLUHC to explain how it is tackling the longstanding problems facing the sector.

The Local Audit Liaison Committee met on 3 May and on 27 June. DLUHC will publish minutes for these meetings in the coming weeks. In the meantime the minutes for past meetings are available to view.

On 31 May CIPFA issued a statement on the statutory financial reporting deadline for local government.

The NAO published a supplementary guidance note for auditors on 18 May – Considering the impact of the Local Government Pension Scheme 2022 Triennial Valuation. This is in relation to the pension valuation issue.

On 17 May CIPFA published supplementary guidance covering the impact of triennial valuation statements received for IAS19 Employee Benefits Reporting for financial statements for 2021-22 and earlier years, where opinions on those statements have yet to be issued – CIPFA Bulletin 14 Supplement | CIPFA.

On 16 May the NAO issued the following guidance for audit committees – Quality assurance of models: a guide for audit committees.

On 24 April CIPFA published a major report on sustainability reporting in the public sector providing guidance, best practice and advice to help public sector bodies prepare sustainability reports – Public sector sustainability reporting: time to step it up.