Consultation proposal

PSAA proposals for a new approach to fee variations

PSAA consulted on proposed new arrangements for determining fee variations for local audits of opted-in bodies from audits of 2020/21 accounts onwards, as set out below.

The fee variations process requires the auditor to discuss all proposed variations with the audited body before submitting them to PSAA for determination. Feedback from both auditors and audited bodies frequently refers to the practical challenges and limited value of local discussions about proposed variations which relate to those factors which affect most or all audited bodies. Many contributors have asked PSAA to take a national lead on additional fees, where possible removing the need for local negotiations.

The consultation therefore proposed a new approach based on two types of variation, subject to appropriate changes to regulations:

  • national variations, required for changes that relate to the conduct of all or most audits, such as changes to the auditing and accounting codes, standards and regulatory requirements, where a standard cost can be reasonably estimated; and
  • local variations, required for issues that relate to local factors arising from the conduct of a particular audit, such as the additional audit work required if accounts reflect complex transactions that are not built into the scale fee, or where working papers are poorly prepared, or for work relating to an auditor’s statutory responsibilities such as objections, statutory recommendations or public interest reports.

The consultation closed on Tuesday 1 December 2020.

Please note that fee variation arrangements for 2019/20 audits remain unchanged and are not affected by the proposals in this consultation.