Business Plan to 31 March 2028

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About PSAA

  1. Public Sector Audit Appointments Limited (PSAA) is a not-for-profit company limited by guarantee without share capital. The company’s sole member and guarantor is the Improvement and Development Agency (IDeA), which is a subsidiary of the Local Government Association (LGA). PSAA is operationally independent of both organisations.
  2. PSAA began operations on 1 April 2015 when the then Secretary of State for Communities and Local Government delegated to PSAA on a transitional basis several statutory functions and novated contracts following the closure of the Audit Commission. These responsibilities included appointing auditors and setting audit fees for both principal and smaller authorities and grant certification. Whilst most of these transitional responsibilities have ended, there remain a few residual audits under these arrangements for which we are responsible.
  3. In July 2016 PSAA was specified by the Secretary of State as an appointing person for principal local government, fire authorities and police bodies for audits from 2018/19, under the provisions of the Local Audit and Accountability Act 2014 (the Act) and the Local Audit (Appointing Person) Regulations 2015 (the Regulations), which provide the framework for how we operate.
  4. We developed a national auditor appointment scheme which commenced in April 2018. We set the duration of the first appointing period at five years until 31 March 2023, covering audits of the accounts for the financial years 2018/19 to 2022/23. The second appointing period commenced in April 2023 covering audits of the accounts for the financial years 2023/24 to 2027/28.
  5. Over the past two years our key areas of focus have been:
    • Fulfilling our statutory responsibilities as the ‘appointing person’ to the highest possible standards by delivering an effective and efficient national auditor appointment scheme for our opted-in bodies within the local audit framework for the second appointing period covering the audits of 2023/24 to 2027/28, including a major reset of scale fees for the 2023/24 audits following the audit services procurement undertaken in 2022 and establishing strengthened arrangements to manage the resulting audit services contracts.
    • Supporting systems leadership through being a proactive and committed player within the local audit system. Significantly contributing to the design and delivery of the Government’s solution to address the local audit backlog, supporting the work of local audit system stakeholders more broadly and responding to the implementation of the backlog solution which gave rise to substantially increased volumes of fee variations.
    • Identifying ways to increase our operational effectiveness by implementing new systems and increasing our organisational capacity and resilience in response to unsustainable workloads stemming from local audit system challenges. We also completed a formal review to implement sustainable long-term working arrangements, recognising the flexibility enabled by technology and new working practices in a post-Covid world.
  1. Alignment with the Government’s Transition Plan is vital so our work to close down PSAA and to transition to the LAO will form a significant part of this business plan, alongside the delivery of our statutory functions.
  2. At the same time, we are prioritising continuity and stability, so that the transition is smooth and effective for all impacted stakeholders. This business plan covers the period of our transition to the new arrangements so sets out a programme of work to enable us to continue to deliver our appointing person role, support the Government to reform local audit and establish the LAO. It will require a flexible approach as details of the change programme become clearer. Alignment with the Government’s Transition Plan is vital so our work to close down PSAA and to transition to the LAO will form a significant part of work during this period, alongside the delivery of our statutory functions.

Strategic objectives

  1. Our responsibilities and aims are expressed through a series of objectives designed in response to our statutory duties, namely to:
    • perform and discharge the remaining functions delegated by the Secretary of State on a transitional basis, up to completion of audits of the accounts for 2027/28.
    • perform and discharge the functions of an appointing person specified by the Secretary of State, including:
      • to issue an invitation to all relevant principal authorities to become an opted-in body.
      • to appoint the external auditor to all opted-in bodies principal authorities after consultation (appointing auditors).
      • to specify scales of fees for the audit of accounts of opted-in authorities, before a specified date (currently 1 December of the year to which the audit relates), and after consultation (Setting fees), and vary the fee where appropriate.
      • to keep, and publish, a record of authorities that become opted-in bodies; to oversee issues of appointed auditor independence, monitor compliance, assist in the resolution of disputes or complaints; and deal with the removal of an appointed auditor.
    • take steps to ensure that public money is properly accounted for and protected (Managing public money).
    • oversee the delivery of consistent, high quality and effective audit services to relevant authorities (Managing the audit contracts).
    • ensure effective management of contracts with audit firms for the delivery of audit services to relevant authorities (Managing the audit contracts).
    • be financially responsible, having regard to the efficiency of operating costs and transparently safeguarding fees charged to audited bodies (Being financially responsible).
    • lead our people as a good employer, ensuring that we continue to be fit-for-purpose; motivating and supporting our staff; and communicating with them in an open, honest and timely way (Managing our people).

How we work

  1. Our approach to fulfilling the role of an appointing person is underpinned by the following key principles:
    • exercising our statutory functions consistently, proportionately, openly and fairly.
    • observing the highest standards of integrity and professionalism as the appointing person.
    • taking all reasonable action to address market challenges and to support longer-term sustainability within the local audit market.
    • playing our part alongside key stakeholders to maintain the high standards of public audit which are necessary to command public confidence.
    • consulting and collaborating widely; listening to and learning from those with an interest in what we do.
    • communicating with stakeholders before making decisions and explaining our decisions clearly.
    • taking the time to implement decisions with stakeholder involvement and developing new initiatives when appropriate.
    • being an agile and flexible organisation, changing course if needed to be responsive, both to stakeholders and to our operating environment.
    • treating people and their information with sensitivity, respect and confidentiality.
    • closely monitoring developments and emerging issues relating to the audit market and actively considering what these might mean for local audit and our role as appointing person and for the LAO.   
  1. We operate in a diverse and complex stakeholder landscape so effective communication and engagement are crucial. We recognise that our stakeholders’ requirements and expectations will vary significantly, which means that we need to use a range of ways to communicate and engage.
  2. We have effective working relationships with key stakeholders including MHCLG, the Local Government Association (LGA), the National Audit Office (NAO), the Chartered Institute of Public Finance and Accounting (CIPFA), the Financial Reporting Council (FRC), and the Institute of Chartered Accountants in England and Wales (ICAEW), as well as other organisations with an interest in the local audit system, including relevant sector groups and the media.
  3. We will continue to work closely with MHCLG to support their plans for local audit reform and the creation of the LAO to ensure a smooth handover of relevant functions and to provide service continuity for local government bodies.
  4. We will continue to communicate and engage with opted-in bodies and local audit stakeholders in the delivery of our strategic objectives and to demonstrate the value of our work and contribute our views (and hear the views of others). We will also communicate and engage to support the implementation of changes to reform the local audit framework including through:
    • participation in the Transition Board, the NAO’s Local Auditor Advisory Group and other relevant fora.
    • participation in meetings of Treasurers’ Societies and other relevant networks such as Audit Committee Chair fora.
    • issuing e-bulletins to s151 Officers and Audit Committee Chairs or equivalent.
    • seeking feedback on our communications and engagement activity.
    • hosting our Advisory Panel which meets three times a year, comprising representatives of Treasurers’ Societies.
    • ad hoc delivery of webinars on local audit matters targeted at Audit Committee Chairs and Directors of Finance to explain, debate and discuss key issues.

Local audit context

  1. The local audit context has continued to evolve over the past two years. In December 2024 the Government set out its strategy for the overhaul of local audit. This included the creation of a statutory and independent Local Audit Office (LAO) to take on functions currently fragmented across the system and bring together strategic oversight and technical expertise to identify and address challenges.
  2. Once established, the LAO will absorb PSAA’s responsibilities to procure, appoint and contract manage auditors to local government (local authorities, police, fire and other bodies) in England. The Government’s timetable sees the LAO being created in Autumn 2026 with resources transferring to the new organisation thereafter. The English Devolution and Community Empowerment Bill published on 10 July 2025 includes legislation to reform the local audit system and establish the LAO.
  3. This backdrop of significant change will heavily influence our work for as long as PSAA exists. Our key drivers will be:
    • supporting the development and implementation of the Government’s strategy for local audit reform.
    • supporting a smooth transition and handover to the LAO.
    • supporting the implementation of the backlog solution including the plans to build back audit assurance as soon as possible.
    • securing sufficient audit capacity from which to appoint auditors to support further devolution in England, and local government reorganisation for audits from 2028/29.  

Governance

  1. Following a review of our corporate governance framework in 2024 and in recognition of an increased workload following the Government’s plan to reform the local audit system and our own organisational close down and transition, the Board agreed to increase the number of directors from five to a maximum of seven.
  2. We currently have a Board of six non-executive directors, an Audit Committee, a Procurement & Appointments Committee and a People & Remuneration Committee, all supported by a Chief Executive and a team of staff who have significant experience and skills in procuring and all aspects of managing contracts for public audit services, as well as administering a Companies Act Company. 
  3. Our funding comes from our opted-in bodies. The audit fees paid by opted-in bodies include a provision (<3.5%) to cover our costs to operate the national scheme (Section 4 provides detail on our finances and resourcing).
  4. We ensure that our externally provided services meet our requirements and provide value for money, and that our core systems, processes and tools are resilient, efficiently run, and provide good value and service for the sector.

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