The fee variations process
Local audit regulations provide the statutory framework for audit fees and variations. We set and publish an individual scale fee for each opted-in body each year.
If an auditor considers that substantially more or less work is required, the auditor may submit a fee variation proposal. We assess the explanation, evidence, hours and grade mix before deciding the variation.
Normal audit work is work that would be required irrespective of the audit opinion issued on the previous year’s financial statements. Depending on its nature, this work is either included in the scale fee or considered as a fee variation.
Build-back work is distinct from normal audit work. It is additional work required specifically to rebuild audit assurance following a disclaimed opinion arising from the local audit backlog arrangements. As build-back work is not part of the recurring annual audit, it is not included in the scale fee. The associated costs are therefore assessed separately through the fee variation process.
For 2025/26, auditors should use this process for body-specific work arising from build-back, significant weaknesses in value for money arrangements or limited assurance over reserves. Proposals should distinguish recurring work from one-off work and avoid duplication with existing scale fee assumptions.
PSAA continues to review and strengthen the fee variation process to improve consistency, transparency and comparability in fee variation proposals across firms. During 2026, we commissioned an independent review of a sample of build-back related fee variations and used the findings to improve our approach. Firms are expected to provide clearer explanations of proposed work, stronger supporting evidence and earlier information about the likely nature, timing and cost of build-back activity. We have also introduced standard templates for build-back cost estimates, which firms are expected to share with affected bodies. These estimates support financial planning and discussion between bodies and auditors, but they do not predetermine any future fee variation determination.
When reviewing build-back fee variations, PSAA will distinguish between central project costs and body-specific audit work. We will assess proposals against the work undertaken, supporting evidence, build-back estimates previously shared with bodies and relevant cross-firm comparisons. We will investigate significant differences, seek additional evidence where necessary and exclude costs already recovered through other fee variations. Our objective is to ensure that fees reflect the work required at each body, while providing transparency for bodies and a fair and consistent basis for auditors to recover eligible costs.
Information on PSAA’s fee variations process is available on our website.