The 2026/27 fee scale
Introduction
The Local Audit (Appointing Person) Regulations 2015 and the Local Audit (Appointing Person) (Amendment) Regulations 2022 require that PSAA, as an appointing person, must specify the scale or scales of fees for the audit of the accounts of authorities before 1 December of the financial year to which the scale of fees relates.
We consult in September so that our fee proposals are based on the latest information available and to provide bodies with their proposed fees for budget planning.
We set the fee scale each year based on the income we require to meet our own and the audit contract costs. We regularly review the efficiency of our services to minimise our call on the public purse.
Changes to IFRS 16 (Leases) and ISA (UK) 600 (Group Audits) are both applicable to local government audits from 2024/25. Changes to the Code of Accounting Practice on the application of IAS 16 (Property, Plant and Equipment), IAS 36 (Impairment of Assets) and IAS 38 (Intangible Assets) are applicable to local government audits from 2025/26. We concluded that we are unable to consolidate additional fees into the fee scale at this point as the fees for individual bodies will be highly dependent on a body’s arrangements and the level of work required. Once sufficient evidence is available to demonstrate a recurring and quantifiable impact, the LAO may wish to consider how such costs should be reflected within its future fee regime.
Our fees research considered the impact of other changes in audit and accounting requirements applicable for the first time for 2025/26 and 2026/27. We do not currently expect the amendments to the Code of Practice on Local Authority Accounting to have a significant impact on audit fees across the sector. AGN 03, Auditors’ work on Value for Money arrangements, may result in significant additional audit costs where auditors identify significant weaknesses in arrangements; however, the impact will depend on the circumstances of individual bodies and therefore is not suitable for incorporation into the fee scale at this time.
2026/27 fee scale elements
In summary, we propose that the fee scale for 2026/27 will be built up as follows:
| 2025/26 fee scale: proposed elements |
|---|
| A – The scale fees for 2025/26 Plus: B – Adjustments for specific opted-in bodies, where updated information is now available C – A contractual adjustment of 3.0% for inflation |
Further information on each element is provided below.
A. The scale fees set for 2025/26
We use the previous year’s scale fees as the starting point for the next year and then consider any necessary adjustments.
B. Adjustments for specific opted-in bodies
Delayed and disclaimed audits have limited the information available to set the fee scale, sometimes for multiple years. Where the need for additional or reduced recurrent work is now clear from approved fee variations or other information, we need to update scale fees. This has the benefit of providing clarity on expected fees before audit work is undertaken and reduces the need for ongoing fee variations.
We have considered information available since we published the 2025/26 fee scale in November 2025 and have identified 395 audits (74%) where fee increases or reductions are required for recurrent audit work, for instance changes to Group structures.
We have also reviewed the bodies we identified as special cases when we set the 2025/26 fee scale and considered whether the additional fee adjustment remains appropriate. Special cases are bodies where local circumstances require additional audit effort not adequately reflected through the standard fee model. We have identified 7 additional special cases for 2026/27.
We discussed the potential audit implications of the Government’s recent LGPS “Fit for the Future” reforms, and the introduction of The Local Government Pension Scheme (Pooling, Management and Investment of Funds) Regulations 2026 with audit firms. However, pending greater clarity on the practical implications of these changes, we have insufficient evidence to quantify any recurring audit impact. We therefore propose no scale fee adjustment at this stage.
Following the 2025/26 Triennial pensions valuations, many bodies are again reporting a gross pension asset surplus and must consider the accounting requirements of IFRIC 14. This follows the prior Triennial valuation in 2022/23, when market movements and changes in actuarial assumptions arising from the Covid-19 pandemic resulted in significant changes to pension fund positions, with bodies typically remaining in a surplus position for the following two years. As this work is expected to continue while surpluses remain, we propose a recurring fee increase rather than annual fee variations.
We are monitoring proposed revisions to Auditor Guidance Note 01 (AGN/01) regarding Public Interest Entities (PIEs). We do not expect the revisions to take effect in time to influence the 2026/27 fee-setting process. We therefore propose no amendments to PIE fees at this stage. If future revisions reduce audit work required for 2026/27, we will reflect this through negative fee variations.
C. Adjustment for inflation
The 2022 audit contracts specify that indexation of the firms’ remuneration will apply from 1 April 2024 using the Consumer Prices Index (CPI) 12-month rate published by the Office for National Statistics (ONS) prior to 1 April. The applicable rate is 3.0% (published 25 March 2026). The increase applies to 2026/27 scale fees and the hourly rates for additional work submitted as fee variations.
2026/27 additional fee hourly rates
| Partner/ Director | Senior Manager /Manager | Senior Auditor | Other Staff | |
|---|---|---|---|---|
| 2026/27 audits | £453 | £250 | £162 | £124 |
Summary of proposal
We will write to each opted-in body during the consultation period setting out their proposed scale fee based on these elements. The example below illustrates how the scale fee will be made up:
Calculation example – 2026/27 scale fees
| Example (unitary council) | |
|---|---|
| A) 2025/26 scale fee | £300,000 |
| B) Add/remove: changes in ongoing fee variations (specific bodies only, not applicable to all audits) | £3,500 |
| Subtotal 2026/27 scale fees plus recurring additional fees | £303,500 |
| C) Contractual indexation (3.0% of subtotal) | £9,105 |
| Total scale fee for 2026/27 | £312,605 |