2019/20 work programme
- Under the provisions of the 2014 Act, the NAO is responsible for publishing the statutory Code of Audit Practice (the Code) for auditors of local public bodies. Further information on the Code and supporting guidance is available on the NAO website.
- Audits of the accounts for 2019/20 will be undertaken in line with the Code published in April 2015.
- PSAA has set the 2019/20 fee scale with the expectation that there will be no significant changes in NAO guidance for auditors or CIPFA/LASAAC financial reporting requirements that would affect materially the amount of audit work to be undertaken for 2019/20 audits. Any ongoing impact of IFRS 9 and 15 will vary dependent on each organisation’s circumstances, and so a blanket variation to scale fees is not appropriate, and additional work will be subject to individual fee variations.
Scope of audit
- The Code sets the overall scope of the audit, requiring the auditor to give an opinion on the financial statements of a principal body subject to audit under the 2014 Act, and a conclusion on the arrangements for value for money.
- Auditors are required to use judgement to design an audit approach that meets their statutory responsibilities under the Code and the 2014 Act. The Code requires auditors to carry out their work in compliance with the requirements of the relevant professional standards issued by the Financial Reporting Council and relevant quality control standards.
- The Code requires that the auditor’s work should be risk-based and proportionate. Auditors tailor their work to reflect local circumstances and their assessment of audit risk. They do this by assessing the significant financial and operational risks facing an audited body, and evaluating the arrangements it has put in place to manage those risks.
- The audited body is responsible for putting in place appropriate arrangements to support the proper conduct of public business, and for ensuring that public money is safeguarded, properly accounted for and used with due regard to value for money.
Other auditor responsibilities
- Under the 2014 Act the auditor has powers in addition to the responsibilities in relation to an authority’s financial statements and arrangements to secure value for money. These additional responsibilities and duties encompass giving electors the opportunity to raise questions about the accounts, and considering and deciding on objections received in relation to the accounts. The fee scale set out in this document does not cover work relating to auditors’ wider responsibilities such as dealing with objections or in relation to issuing statutory recommendations, for which additional fees are chargeable.
- Auditors have no responsibility under the 2014 Act for certifying claims or returns for grant paying government departments. Where such work is requested, a separate tripartite engagement between the relevant department, the audited body and a reporting accountant is needed. PSAA has no powers to make certification arrangements from 2018/19, and its audit contracts do not cover certification work.
- It is recognised that the auditor may be well placed to provide certain types of non-audit services work for the authorities subject to meeting the requirements of the FRC Ethical Standard and the NAO’s General Guidance for Auditors (AGN01). The PSAA Terms of Appointment set out the process to be followed when considering such work recognising that this should not compromise a firm’s independence nor be reasonably perceived to do so by an objective, reasonable and informed third party. The fees for such work is a matter for the auditor and contracting authority, including being subject to the restrictions set out above.
- Assurance over audit quality was a fundamental part of the procurement. In order for an audit firm to be eligible to tender for an audit contract with PSAA it is required to fulfil the criteria determined by legislation as evaluated by the ICAEW (the Recognised Supervisory Body) and be listed on the ICAEW’s register of Local Auditors. Contracts were awarded after a competitive tender which balanced audit quality with price. These pre-award processes help to ensure that the appointed firms meet the audit quality standards required for satisfactory performance of the contract.
- Post award we have developed our arrangements for monitoring firms’ performance and reporting on audit quality, based on the International Auditing and Assurance Standards Board Framework for Audit Quality. We will publish reports on the managing audit contracts page of our website. We have also established the Local Audit Quality Forum, which is focused on supporting the effectiveness of local audit committees.
- Under the provisions of the 2014 Act, the Financial Reporting Council and the recognised supervisory bodies have regulatory responsibility for the quality of audit work produced by audit firms.
- In previous years PSAA has published a summary of the results of auditors’ work. For 2018/19 PSAA will work with other organisations such as the NAO to determine the most appropriate reporting mechanism, recognising that PSAA no longer covers all principal local government bodies.