September 2023
Summary
This briefing sets out information for 2022/23 audits on the expected impact on audit fees of the requirement for a VFM arrangements commentary in the Code of Audit Practice 2020 and some changes in auditing and accounting standards. PSAA is providing the information to support local discussions between opted-in bodies and auditors about fee variations for 2022/23 audits specifically.
PSAA consults annually on fee scales based on the most accurate information available about audit requirements and the work needed to deliver them. Where sufficiently complete information is not available, or it is not possible to establish with reasonable certainty the level of any additional fees that is appropriate, additional requirements are assessed using the fee variations process.
We consulted on and set the 2022/23 fee scale in autumn 2022, as required under local audit regulations. The regulations allow PSAA to approve fee variation requests for substantial additional audit requirements that become apparent during the course of an audit, after the fee scale has been set. Fee variations can be approved for individual opted-in bodies, or for groupings of bodies.
PSAA commissions external independent technical research to assess the expected impact on audit work programmes of a range of new or updated local audit requirements. The research was first undertaken in 2021 and has been updated in 2022 and 2023.
Updated findings in 2023, using information on additional fees approved by PSAA through the fee variations process, has confirmed that the minimum fee ranges developed for 2020/21 audits for the core work on the VFM arrangements commentary and on ISA 540 remain appropriate for 2021/22 and 2022/23 audits and are a reliable benchmark.
We have therefore set out in this document the information on the factors and minimum additional fee ranges for some specific additional audit work requirements that we think will be helpful to opted-in bodies and auditors for 2022/23. This information is indicative and cannot be prescriptive because of the potential impact of specific local circumstances or audit risks for individual opted-in bodies. The information reflects the minimum additional core audit work required.
The 2023 research has also confirmed the basis on which the additional fees for the core work on the VFM arrangements commentary and ISA 540 requirements could be consolidated on an equitable basis into the fee scale for 2023/24. This would remove the need for continuing local discussion of additional fees for the core elements of these audit requirements. The consultation on the 2023/24 audit fee scale sets out more information.