2018/19 audit fee scale

March 2018


  1. This document sets out the scale of fees for the audit work to be undertaken by appointed auditors in respect of the 2018/19 financial statements at relevant principal authorities that have opted into Public Sector Audit Appointments’ (PSAA) national auditor appointment arrangements.
  2. The Local Audit (Appointing Person) Regulations 2015 (the Regulations) require PSAA to consult on and specify, before the start of the financial year to which the fees relate, the scale of fees for the audit of the accounts of opted-in authorities.
  3. Audit work will be undertaken under the requirements of the Code of Audit Practice and supporting guidance published by the National Audit Office (NAO) on behalf of the Comptroller and Auditor General, the financial reporting requirements set out in the Code of Practice on Local Authority Accounting published by CIPFA/LASAAC, and the professional standards applicable to auditors’ work.
  4. The statement of responsibilities of auditors and audited bodies applies to the work covered by the fee scale set out in this document. The statement effectively represents the terms of engagement between appointed auditors and audited bodies, and summarises their respective responsibilities.


  1. PSAA is specified under the Local Audit and Accountability Act 2014 (the 2014 Act) and the Regulations as the appointing person for principal local government bodies in England, including local police bodies.
  2. PSAA’s responsibilities as an appointing person include appointing auditors to opted-in bodies, setting fees, and monitoring the quality of auditors’ work provided under our contracts with audit firms. More information about PSAA is available on our website.
  3. During 2017, PSAA made auditor appointments for the five years of the current appointing period, covering the audits of the financial statements of opted-in bodies for 2018/19 to 2022/23. A list of opted-in bodies and the audit firm PSAA has appointed as the auditor of each body is available on the auditor appointments page of our website.

2018/19 scale fees

  1. PSAA has set the fee scale for 2018/19 on the basis that individual scale fees for all opted-in bodies are the fees applicable for 2017/18 with a reduction of 23 per cent. This gives opted-in bodies the benefit of the cost savings achieved in the recent audit procurement, and continues the practice of averaging firms’ costs so that all bodies benefit from the same proportionate savings, irrespective of the firm appointed to a particular opted-in body. It also passes on the benefit of economies which PSAA is making in its own operating costs.
  2. The fee reduction for 2018/19 follows the significant reductions in scale fees made by the Audit Commission between 2012/13 and 2015/16. In part those reductions were possible as a result of a significant reduction in the staffing and activities of the Audit Commission as it prepared for closure.
  3. We received 32 responses to our consultation on the 2018/19 fee scale, with opted-in bodies in particular expressing support for our proposals. We have published a summary of the consultation on our website.
  4. Individual 2018/19 scale fees for opted-in bodies and further information on fees is available on the 2018/19 scale of fees page of our website.

Scale fees beyond 2018/19

  1. PSAA hopes to be able to maintain the 2018/19 reduction of 23 per cent in scale fees for the first three years of the appointing period, based on current assumptions about inflation and the amount of work auditors are required to undertake. However, the uncertainties are such that we cannot guarantee this at this stage.
  2. We will review the position each year when we update our assumptions and estimates. The most significant variables which are likely to influence our decision-making are:
    • Inflation: there is uncertainty about the expected level of inflation but a generally rising trend. Our contracts with audit firms include provision for inflation adjustments in the later years of the appointing period.
    • Code of Audit Practice: the NAO is required to publish a new Code every five years. The next Code will be applicable from 2020/21, the third year of the appointing period. Any changes to the scope of auditors’ work, whether this increases or decreases the work required, must be reflected in scale fees.
    • Changes in financial reporting requirements: current scale fees reflect the audit work needed based on current financial reporting requirements. Changes to those requirements may have an impact on scale fees.
  1. During the appointing period we will consult on scale fees each year, before publishing the fee scale for the following year.
  2. Scale fees must cover both the cost of auditors’ work at individual opted-in bodies and PSAA’s own costs. PSAA is undertaking a review of its own costs and staffing structure and implementing changes that will reduce significantly the company’s cost base for the appointing period.

Distribution of surplus

  1. PSAA operates on a not-for-profit basis. Any surplus arising from the scale fees set following consultation will be distributed to opted-in bodies during the appointing period.
  2. By March 2019, we expect all audits undertaken under the transitional arrangements (the arrangements made by the Secretary of State on the closure of the Audit Commission for audits of financial periods up to and including 2017/18) to be completed. The PSAA Board therefore anticipates making a final distribution of surplus in relation to the transitional period during the financial year 2019/20.


  1. If you have questions about this fee scale document, please send them to us by email to: workandfeesconsultation@psaa.co.uk.

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