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:
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.
No. Audited bodies are not required to publish Contract Award Notices for audit services provided under PSAA arrangements (covering current contracts up to 31 March 2030), as they do not award the contracts themselves.
PSAA procured and awarded the current contracts to audit firms under the Public Contracts Regulations 2015 (PCR 2015) through centrally managed arrangements. The Procurement Act 2023 does not apply as the contracts were procured under PCR 2015 and PSAA will use that suite of notices for any related updates.
PSAA is responsible for publishing all relevant notices relating to the audit contracts it procures. For the 2022 contracts (the second appointing period), PSAA has already fulfilled all obligations by publishing a:
No further notices are required in relation to these contracts.
When PSAA appoints auditors to individual bodies, it does so under existing contracts. These appointments do not constitute new contract awards and therefore do not trigger procurement obligations for audited bodies. The audit appointments are made under existing contractual and statutory arrangements.
Under Regulation 18 of the Local Audit (Appointing Person) Regulations 2015, opted-in bodies must pay PSAA the audit fee determined under Regulation 17. Where audit firms invoice audited bodies directly, they do so as agents of PSAA. These payments fulfil statutory obligations and do not create a contractual relationship between the audited body and the audit firm.
PSAA’s contracts for audit services are expected to pass to the Local Audit Office (LAO) in spring 2027, alongside the LAO acquiring the power to appoint auditors to relevant local government bodies. It will remain the case that audited bodies are not required to publish Contract Award Notices for audit services.
In summary, audited bodies do not need to publish procurement notices or take any further procurement action, as PSAA has met all relevant requirements.
For further information please contact procurement@psaa.co.uk.
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.
Our contracts covering the audits from 2023/24 to 2027/28 require auditors to co-operate with us in seeking reasonable and practical ways to improve the sustainability of the delivery of the Services.
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.