November 2021 news bulletin

Welcome to our fourth PSAA e-bulletin.

This month we held the first of our market engagement webinars with potential suppliers, and the second in our Autumn Winter Webinar series which focussed on ‘Making Auditor Appointments”.

We have continued to communicate on the preparations for next Appointing Period with an opinion piece from our Chair, Steve Freer, appearing in Local Government Chronicle ‘Opening the door to new local authority auditors’. In the article he talks about how next year’s local audit procurement will seek to improve the timeliness of audit opinions, and acknowledges some of the challenges that have faced the industry stemming from the wider audit profession and current environment. We also presented to the Society of County Treasurers annual seminar.

To date, 14 bodies have already confirmed their acceptance of the opt-in invitation and we are aware that many bodies are taking reports to their Audit Committee (or equivalent) proposing to opt in to our national scheme.

In October we reported that only 9% of local government 2020/2021 audit opinions were issued by the target publishing date of 30 September 2021.

This number is slowly increasing. As at 24 November 23% of 2020/21 audit opinions have now been delivered.

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

Yours sincerely Tony Crawley, Chief Executive, PSAA

Content:

 

Formal invitation to become an opted-in authority

It has now been just over two months since PSAA formally invited all eligible bodies to opt-in to the national scheme for local auditor appointments for the audits of 2023/24 through to 2027/28.  So far 14 eligible bodies have accepted the opt-in invitation. As required by the Regulations, their names are published on our website.

The decision to become an opted-in authority must be taken by the members of an authority meeting (i.e. Full Council or equivalent), except where the authority is a corporation sole, such as a police and crime commissioner, in which case this decision can be taken by the holder of that office.

As previously mentioned the LGA has helpfully produced a specimen report that can be easily adapted to support the decision making process to opt in.

The closing date to notify PSAA of your authority’s acceptance of the invitation is Friday 11 March 2022. You can find the latest information on our preparations for the second appointing period on our website and FAQs.

If you are a S151Officer or an Audit Committee Chair and have not received the formal opt-in invitation that was issued via email on 22 September, please email us as soon as possible via [email protected] and we will resend it to you.

Market Engagement webinar with potential suppliers

On 23 November we held our first market engagement webinar with potential suppliers since we published our procurement strategy on 22 September 2021. We were delighted to have the opportunity to share our plans and hear the views of representatives from all nine firms registered as local auditors with the ICAEW and with four firms who are considering entering this market.

We covered in detail our procurement strategy for the main procurement of audit services for the audit of accounts from 2023/24, and the procurement to establish a dynamic purchasing system, which we may use where auditor appointments from 2018/19 onwards need to change during an appointing period. We also outlined the indicative timescales of this work which will continue throughout 2022.

We answered a range of questions including on the proposed lot structure, bidding rules, and basis for bid pricing.

Autumn/Winter webinar series

We held the second webinar in our Autumn/Winter webinar series on 24 November. It focussed on ‘Managing Auditor Appointments’, covering the legal and practical implications, the reasons why an auditor change may be needed, and how we make auditor appointments highlighting the importance of integrity, objectivity and independence.

The slides from the November webinar and the October one on ‘Understanding the new local audit system  are available to view.

Further webinars are planned in early 2022:

Wednesday 19 January 1-2pm: Understanding how we determine your audit fees and what might influence them over the next contract period

Wednesday 16 February 1-2pm: Understanding the 2022 audit services procurement strategy

Wednesday 16 March 1-2pm: Understanding our contract management arrangements

These webinars are mainly aimed at S151 Officers and Audit Committee Chairs, and are an opportunity to find out more about what we do. You can register to attend by clicking on the individual webinar titles above, or if you wish to attend all events please send details of your name, organisation, and email address to [email protected]. We will issue joining instructions when we have registered you.

Local audit news from elsewhere including changes to the Appointing Person regulations

Department of Levelling Up Housing and Communities (DLUHC) next steps in responding to the Redmond report

The DLUHC are expected to publish their response to their technical consultation on the Local Audit Framework by the end of the year. These proposals are due to incorporate their response to the Public Accounts Committee hearing that took place earlier this year.  Once this is in the public domain, we will be able to review and comment further.

Latest report on local audits from the Financial Reporting Council (FRC)

This month the FRC issued their latest report ‘Major Local Audits: Audit Quality Inspection’.  The report outlines their review of 20 major local audits performed by six of the larger audit firms, including large health and local government bodies, for the financial year ended 31 March 2021.

Also this month they published ‘What Makes a Good Audit’, a paper that sets out the FRC views on what conducting a good audit should look like considering three key elements; ‘risk assessment and planning; execution of the audit and completion and reporting’.

 Changes to the Appointing Person Regulations

Last month we mentioned that the Changes to the Appointing Person Regulations were laid before Parliament on 21 October, making details of the proposed changes available to the House of Commons and the House of Lords.

These changes will provide us (as the appointing person) with greater flexibility in setting fees and managing fee variations.  For example, we must set the fee scale by 30 November  each year, rather than 31 March. As a result of the changes, we will consult on the 2022/23 fee scale in September 2022 and publish the fee scale by 30 November 2022. The changes in the regulations mean we will be able to build in changes in audit requirements and approved recurring fee variations to the fee scale on a timelier basis, making scale fees more accurate and reducing the volume of fee variations.

If you are interested to find out more about the changes to the regulations or are interested to view the paper, the UK Parliament website advises that papers can be viewed at the Journal Office in the Palace as soon as they are laid, while copies should also be available in the Vote Office, they also will appear in the Votes and Proceedings and appear in the House of Lords Business Paper.