The costs arose from a system-wide solution that firms could not price into their 2022 bids. We reviewed the submissions and found the included costs reasonable.MHCLG also confirmed that auditors should receive payment for necessary project costs that do not relate directly to individual audits.
The percentage method keeps the charge proportionate to the scale fee and received more support than opposition in the consultation.
The backlog solution required firms to respond to an unprecedented volume of disclaimed opinions and prepare for the later build-back of assurance. Firms did not know, and could not reasonably have foreseen, the nature, scale or complexity of this work when they bid for the current contracts in 2022.
MHCLG sets the grant rules, allocations and payment timetable. Bodies should direct grant questions to MHCLG. We can answer questions about the fee variation, calculation and determination process.
The fee variation applies to bodies that received a backstop-related disclaimed or qualified opinion and fall within the agreed funding route. PSAA worked with MHCLG to align the final list with funding eligibility.
PSAA has published each body’s project cost fee variation calculation with the consultation outcome. The calculation equals 7% of the body’s 2024/25 scale fee.
Firms may invoice bodies after we issue the final determination. We will work with firms and MHCLG to provide clear information on invoicing and grant funding.
Firms reported costs in four areas: initial disclaimer work for 2022/23 and earlier audits; initial disclaimer work for 2023/24 audits; development work for build-back assurance for 2023/24 audits; and development work for build-back assurance for 2024/25 audits. Each area covered relevant methods, internal training, standard documents and guidance, portfolio assessment, and risk and resource management.
When we review firms’ proposals for fee variations we will distinguish between central project costs, such as firm-wide methodologies, guidance and training, and work carried out on an individual body’s audit. Firms must use the standard templates we developed to provide a total build-back cost estimate for each individual audit. Once the auditor has completed […]
It does not cover work on an individual audit opinion or body-specific build-back assurance. Firms must submit those costs separately through the normal fee variation process. We will review the evidence and determine the fee before a firm can charge a body.