This document sets the 2021/22 scale of audit fees payable by local bodies that have opted into PSAA’s appointing person scheme.
Our consultation on the fee scale explained the impact on audit fees of the significant tensions and pressures currently in the audit market and profession. It also set out the practical difficulties for PSAA in setting a realistic fee scale before the start of the relevant financial year, as required under current regulations, because fees must be set more than eighteen months before audit work is complete.
Helpfully, MHCLG has announced its intention to consult on proposed amendments to the relevant regulations, and is expected to make further announcements in relation to its response to the Redmond Review in Spring 2021. The government is also responding to other major reviews of audit by Sir John Kingman, the Competition and Markets Authority and Sir Donald Brydon and has published a white paper Restoring trust in audit and corporate governance. In the meantime, there remains significant uncertainty about the nature and extent of any resulting changes to be taken forward.
In the short term, further developments are also taking place. The coronavirus emergency continues to add complexity to the audit process for finance teams and auditors. The impact of new or updated requirements has still to be evaluated, including for example for the new Code of Audit Practice and possible changes to local government financial reporting requirements proposed by the Redmond review. Further change to the accounts and audit timetable may also be implemented.
These are unprecedented circumstances in which to set the fee scale. PSAA is carrying out a programme of research to provide a detailed and up-to-date understanding of the expected impact on audit fees of changes in audit requirements. Where it is appropriate to introduce national fee variations, for example where changes apply consistently across all or most opted-in bodies, we will consult on proposals once regulations allow. MHCLG has indicated its intention to update the regulations during 2021.
On the basis of the response to our consultation on the 2021/22 fee scale and the information on additional fees we are able to use at this point, PSAA has confirmed the fee scale will comprise the following elements:
- the 2020/21 scale fees; and
- relevant adjustments for ongoing additional audit work from 2018/19 approved fee variations (notified during the consultation period to individual opted-in bodies).
We are very grateful for all the responses to our consultation on the fee scale, which have provided very helpful feedback on our proposals. The PSAA Board has reflected on the consultation outcome and takes very seriously all the points made. Some of the matters raised are complex and extend beyond PSAA’s own remit. Possible solutions have been considered on their merits and having taken into account all stakeholder views.