Regulatory Compliance and Quality Review Programme 2019

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Introduction

  1. This report summarises the results of the Quality Review Process (QRP) for 2017/18 engagements and related contractual monitoring. This is the final year of audit work under the provisions of the Audit Commission Act 1998 as delegated to PSAA through transitional arrangements put in place by the Secretary of State. We will report the results of the first year of monitoring under PSAA’s appointing person responsibilities in 2020.
  2. Public Sector Audit Appointments Limited (PSAA) monitors the performance of the audit firms it has appointed to undertake audits under the Local Audit and Accountability Act 2014. The results of our monitoring provide audited bodies and other stakeholders with assurance that quality audits are being delivered.
  3. We define audit quality as meeting our performance requirements and professional standards. Our objectives are to:
    • provide assurance that the firms have put in place systems and processes to deliver audit work of good quality; and
    • inform our auditor appointment arrangements.
  1. There are two strands to our monitoring:
    • audit quality: applying our annual quality review programme to the audit work undertaken on the financial statements and value for money (VFM) arrangements and housing benefit (HB) certification work for Department for Work and Pensions (DWP); and
    • Terms of Appointment: reporting quarterly on audit firms’ performance with our contract expectations as set out in our Terms of Appointment.
  1. The audit quality monitoring work covered by this report incorporated a range of measurements and checks comprising:
    • the results of our inspection of each firm by the Financial Reporting Council’s (FRC) Audit Quality Review Team (AQRT) as part of our commissioned inspection programme of financial statements and value for money (VFM) arrangements work;
    • the results of reviewing a sample of each firm’s audit Quality Monitoring Reviews (QMRs) of its work on 2017/18 financial statements, VFM arrangements conclusions and Housing Benefit (HB) certification work for the Department for Work and Pensions (DWP);
    • a review of 11 key indicators relating to the Terms of Appointment together with an assessment of each firm’s underlying systems;
    • a review of each firm’s audited body satisfaction surveys for 2017/18 engagements;
    • a review of each firm’s 2017/18 Transparency Report; and
    • a review of the FRC’s most recently published reports on the results of its inspection of the firms’ audits in the private sector.
  1. PSAA’s responsibilities for NHS audits ceased with completion of the 2016/17 engagements. Comparative data will include information relating to NHS audits for 2016/17.

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