Frequently Asked Questions

DLUHC previously consulted on fee variation arrangements for changes in audit requirements that relate to the conduct of all or most audits and where a standard cost can reasonably be estimated across groupings of bodies. Based on the positive response to that consultation, DLUHC enabled the changes by updating the Local Audit (Appointing Person) Regulations 2015.

It may not be possible to apply a global adjustment immediately where a new audit requirement is introduced, and local fee variations may be used initially to determine an appropriate additional fee level until we can see if there is a sufficiently clear position of a standard impact.

In setting the scale fees each year, we aim to update fees to reflect current audit requirements for all audited bodies where possible, based on the information available at the time the fee scale must be set. The factors considered may include the appropriateness of global changes for some requirements. As an example, the fee for the additional work needed for the auditor’s value for money arrangements commentary has been consolidated into scale fees on a proportionate basis for all opted-in bodies following introduction of the new requirement.

If auditors are required to do substantially less work because of regulatory change, then the scale fee would be reduced accordingly. Regulation 17(2) of the Local Audit (Appointing Person) Regulations 2015 enables us to vary fees up or down, where substantially more or less work is needed to complete a Code compliant audit.

We recognise that as part of the drive to improve audit quality the FRC is encouraging use of experts such as valuers, and audit firms can claim additional fees for appropriate use via the fee variations process.

No, acceptance of PSAA’s invitation to opt in means that the body is opted in for the duration of the compulsory appointing period (typically set at five years, so from either 2018/19 or 2023/24).

The only exception is where the body ceases to exist or the body ceases to fall within the classes of authorities for which PSAA is the appointing person.

An eligible body that did not accept the opt-in invitation for an appointing period may request to opt in during the appointing period only:

• for the audits 2023/24 to 2027/28, that is on or after 1 April 2023

PSAA must consider a request as the appointing person in accordance with the Regulations. It must agree to the request unless it has reasonable grounds for refusing it and notify the eligible body within four weeks of its decision with an explanation if the request is refused.

Where the request is accepted, the body will become an opted-in body for the remainder of the appointing period on the date the notice is received by PSAA.

PSAA may recover from the opted-in body its reasonable costs for making arrangements to appoint a local auditor in these circumstances.

The statement provides a breakdown of the individual fee variation elements we have considered and are minded to approve.

For both the 2017 and 2022 procurements, the quality evaluation of tender responses was independently observed by the LGA having put in place assurance to guarantee commercial confidentiality in the process.

We review and determine firms’ audit fee proposals in accordance with 17(2) of the Local Audit (Appointing Person) Regulations. Our work includes looking in detail at the fee variations submitted to assess whether we consider them to be appropriate. When making determinations we consider each individual fee variation and compare similar fee variations across all audit firms. Where appropriate we make adjustments having followed our process. 

For disclaimed audit opinions, we have reviewed each firm’s audit procedures to issue them. The firms were statutorily obliged to take into account the Local Audit Reset and Recovery Implementation Guidance (LARRIGs) issued in September 2024 by the National Audit Office and endorsed by the Financial Reporting Council, and Ministerial statements had stated that they would be paid for work that they did in good faith to deliver what was needed to meet the requirements of the Code of Audit Practice. 

Pension funds are not separate legal entities from their administering local authority for audit, and are therefore not listed as relevant authorities in schedule 2 of the Local Audit and Accountability Act 2014.

The auditor appointment to an opted-in local authority includes the audit of the pension fund where the authority is the administering body. The pension fund audit is subject to a separate engagement and scale audit fee, but the auditor appointment covers both the local authority and the pension fund.

Opting into the appointing person scheme removes the need for a body to set up an independent Auditor Panel. The detailed requirements for this are set out in the Local Audit and Accountability Act 2014 and the Local Audit (Appointing Person) Regulations 2015.