No. Project costs and body-specific rebuilding assurance work are separate categories of cost. PSAA reviews fee variation proposals to ensure that costs already recovered through the project cost fee variation are not recovered a second time through build-back fee variations.
| Not automatically. The firm must show that the additional cost arose from work outside the assumptions underlying the scale fee and that the work was necessary. Costs caused by an auditor not meeting its responsibilities are not eligible for a fee variation. PSAA reviews the evidence and considers the body’s comments before determining the fee. |
We welcome responses from bodies and other stakeholders during the consultation period. Bodies should provide any evidence that supports a different amount. This may include evidence that the work is not recurring, that local arrangements have changed, or that a previous fee variation should not form part of the scale fee. All responses will be considered before the Board approves and publishes the final 2026/27 fee scale. A link to the consultation survey is available in the “Responding to the consultation” section above.
The statement provides a breakdown of the individual fee variation elements we have considered and are minded to approve.
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.
For bodies with only VFM arrangements-related fees and the fees for issuing a disclaimer opinion, there will be no separate scale fee charge.
For all other fee variations this will depend on the circumstances of each body. Please note that for a disclaimed audit we will assess separately any fees in relation to audit work in response to elector queries and objections.
PSAA must follow the requirements of the Local Audit (Appointing Person) Regulations 2015.
The information we use to set the scale fees includes the previous year’s fees, fee variations that relate to recurrent requirements, and any new audit requirements. We consult annually on the proposed fee scale, and individual scale fees are published on this website each year once the fee scale is confirmed by our Board following consultation.
We continue to pool scheme costs and charge fees to audited bodies in accordance with our published fee scale, as amended following consultations with scheme members and other interested parties. Pooling means that everyone in the scheme accesses the rates secured via our large-scale competitive procurement process, a key tenet of the national collective scheme.
Additional fees (fee variations) are part of the legal framework. They occur if auditors are required to do substantially more or less work than anticipated, for example if local circumstances or the Code of Audit Practice change or if the Regulator (the FRC) increases its requirements on auditors. Our fee variations process ensures that fees for additional work are robustly assessed. Additional fees cannot be invoiced until we determine them.
Our audit contracts provide for an inflationary increase for 2025/26 audits, based on the ONS annual CPI rate published prior to 1 April 2025, which was 2.8% on 26 March 2025. The increase applies to 2025/26 scale fees and the hourly rates for additional work submitted as fee variations.
The local audit regulations require PSAA to specify the fee scale before 1 December of the financial year to which the audit fees relate. When we consult on and set the fee scale, we aim to update fees to reflect changes in audit requirements. These have changed significantly in recent years due to increased regulatory challenge on audit quality, updated auditing and financial reporting standards, and the move to a VFM arrangements commentary.
If a change in audit requirements is substantial and we can reliably estimate the additional fees, we will incorporate them into the fee scale as soon as we can. If we need more information, we use the fee variations process in the interim to assess the ongoing additional work and fees needed. 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.
Bodies can reduce the risk by:
These actions cannot prevent every fee variation, but they can reduce avoidable additional work and help bodies understand potential costs earlier.
For fee-related matters, please contact us via our dedicated email address: feevariations@psaa.co.uk.
For general enquiries, you can reach us at general.enquiries@psaa.co.uk.
We also regularly attend Treasurer Society meetings and other sector events, including CIPFA regional events, where you are welcome to speak with us directly.