This edition of our quarterly e-bulletin includes an update on local audit reform, details of our consultation on the 2026/27 fees, and a summary of local audit news from elsewhere.
We want to thank all the Directors of Finance and Audit Committee Chairs who took the time to complete our client survey for the 2024/25 audits. We will publish the survey results on our website by October 2026.
We hope you continue to find this bulletin useful, and we welcome your suggestions for future topics (contact the team). You can also stay up to date with our news by following us on LinkedIn.
Content:
- Update on local audit reform
- Consultation on the 2026/27 audit fees
- Outcome of firms’ project costs fee variation consultation
- Audit opinion data
- Contract Monitoring Data Pack: Quarter 4 for 2025/26
- PSAA audit services Contract Award Notices
- Local audit news from elsewhere
Update on local audit reform
On 31 July the Cabinet published the policy paper ‘Rewiring the state’, which included the reference below to the Local Audit Office (LAO):
‘We will also strengthen local accountability mechanisms to reflect the greater funding freedom for mayors: chief executives of mayoral strategic authorities will become Local Accounting Officers accountable for the use of public money. There will be a stronger role for the Local Audit Office, and we will discuss with the National Audit Office how it can complement this.’
This follows on from MHCLG announcing on 16 July the structure decisions for a further 14 areas as part of its Local Government Reorganisation (LGR) programme. Under the proposals, 134 councils will be replaced by 38 new unitary authorities. The Local Government Association offers support to help bodies understand and manage the changes arising from LGR, including practical guidance for bodies as they plan and prepare for the transition.
On 1 July the Ministry of Housing, Communities and Local Government (MHCLG) confirmed the appointment of Bill Butler as Chair of the LAO for a five-year term. We issued a press release in response welcoming the appointment and expressing our commitment to working with Bill as the LAO takes shape. Bill will continue in his role as PSAA Chair, and agreed arrangements are in place to ensure the independence of both organisations.
MHCLG has also advertised the roles of the Controller of Local Audit and five Non-Executive Directors for the LAO.
Consultation on the 2026/27 audit fees
We will consult on the 2026/27 audit scale fees for opted-in bodies from 14 September 2026. The consultation will run for four weeks and close at 5pm on 9 October 2026. We will host a webinar on 28 September to explain our proposed changes and provide an opportunity for questions and answers. The webinar will also include an update on the development of the LAO.
We will issue an email at the launch of the consultation with details of the proposed fee scale, a reminder of the closing date and an invitation to our webinar. Details of the consultation will also be available on our website.
The PSAA Board will consider all feedback before confirming the scale fees. We will publish the final fee scale on our website with a summary of our consideration of the consultation responses by the statutory deadline of 30 November and notify all opted-in bodies and stakeholders by email.
Outcome of firms’ project costs fee variation consultation
We want to thank everyone who responded to our recent consultation on a proposed one-off standardised fee variation to cover audit firms’ project costs associated with the local audit backlog solution. We consulted bodies that received a disclaimed or qualified opinion in 2024/25, as part of the wider local audit reset and recovery arrangements following the introduction of the statutory backstop dates.
Most respondents supported the proposals. Our Board carefully considered the consultation responses before approving the final approach, noting the comments that were made. We used the feedback received to shape the final approach and develop a comprehensive set of FAQs to explain our cost review process, MHCLG’s funding arrangements and the controls that will be applied to reduce the risk of double recovery.
In summary, we have set the final one-off fee variation at 7% of the relevant audit’s 2024/25 scale fee and published the consultation outcome on our website. MHCLG has confirmed that build-back grant payments will fund eligible costs charged through our fee variation process.
Audit opinion data
We have published the number of audit opinions delivered up to 31 July 2026, which is 440 out of 457 for 2024/25, and 514 out of 531 when pension fund audits are included. A reminder that we publish data on audit opinion delivery each month, covering audits from 2018/19 onwards.
Contract Monitoring Data Pack: Quarter 4 for 2025/26
We have published our Contract Monitoring Data Pack: Quarter 4 for 2025/26. The data pack covers audit opinions, approved fee variations and the number of electors’ objections up to 31 March 2026.
We will publish the Quarter 1 2026/27 data pack in September, and it will be available on our website alongside data packs from previous quarters.
PSAA audit services Contract Award Notices
Bodies that have opted into our auditor appointment scheme do not need to publish a separate contract award or transparency notice for external audit services. We published a Contract Award Notice at the time of the 2022 procurement, covering the full audit period up to 2029/30.
For clarity, PSAA is the contracting authority acting in the statutory role of Appointing Person and has procured audit services on behalf of each opted-in body and holds the contracts directly with appointed audit firms. This means that:
- No additional transparency or award notice is required locally by any opted-in body.
- You can refer to the original PSAA Contract Award Notice for audit or transparency purposes, if desired.
In summary, opted-in bodies do not need to take any further procurement action, as PSAA has met all relevant requirements. Further information is available in our FAQ.
Local audit news from elsewhere
CIPFA LASAAC launched its consultation on the 2027/28 Code of Practice on Local Authority Accounting in the UK (the Code) on 20 July and invited responses by 27 September. The updated Code will apply to accounting periods starting on or after 1 April 2027.
On 18 June the Comptroller and Auditor General disclaimed his opinion on the Whole of Government Accounts for 2024/25 for the third consecutive year, providing no assurance to Parliament on the financial statements. This is due to a lack of audit assurance over local authority finances in England.
Ernst & Young published From reset to recovery in June, which sets out their insights from local government audits across England for 2024/25.
In May the Smaller Authorities’ Audit Appointments published the results of Auditors’ work at Smaller Authorities for 2024/25.