Response to consultations on proposals for arrangements from April 2023

PSAA’s role in local audit

PSAA’s responsibilities as the appointing person in the local audit framework are specifically to appoint auditors to opted-in bodies, set scales of fees, and manage contracts with audit firms for delivery of external audit services to opted-in bodies.

The local audit framework regulations determine the way in which we carry out many of our functions. For example, they require PSAA to formally invite all eligible bodies to opt into our scheme for each appointing period, they determine the process and timescales through which auditor appointments must be made, the scale fees set and they impose the duty to consider and process every fee variation on a case-by-case basis, irrespective of its value.

Under the current arrangements, the National Audit Office sets the scope of auditors’ work in the Code of Audit Practice, published on an up to five-yearly cycle. The Financial Reporting Council determines regulatory requirements, taking into account its latest annual audit quality reviews once an audit year is completed. CIPFA/LASAAC prescribes the financial reporting requirements applicable to local government bodies.

MHCLG’s Spring statement proposes changes to the current arrangements. At the time of writing, a formal consultation on the proposals in the Spring statement is underway and is due to close on 22 September 2021. Following the publication of its response to the consultation on changes to the Local Audit (Appointing Person) Regulations 2015, the government has committed to introduce secondary legislation to provide the appointing person with greater flexibility to allow a fee scale to be set during the audit year. New regulations are expected to come in to force this Autumn. These changes would enable approved recurring fee variations to be baked into the scale fee at an earlier date so the scale fees are more accurate and the volume of fee variations is reduced.

The significant work to reform audit in the wake of the four independent reviews is underway. Further wide-ranging change is almost certain to occur during the next few years, and is very likely to have an impact during the appointing period that will commence in April 2023. Alongside changes to the general and local audit framework, the Government is reviewing the public sector procurement regulations, following the UK’s withdrawal from the European Union.

Given this context we intend to publish our procurement strategy in late September but we will keep it under review and may make appropriate revisions as a result of regulation changes, where these might enable all parties to gain increased benefits.

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