Scale fees are intended to reflect the audit work required at each audited body. Size and gross expenditure can provide useful context, but they are not the only factors that determine the scope or cost of an audit.
The audit work required may also be affected by factors such as the complexity of the financial statements, group arrangements, significant accounting judgements, pension positions, Property, Plant and Equipment valuations, and the auditor’s assessment of risk and other local circumstances. As a result, audit fees expressed as a percentage of gross expenditure may vary significantly and may not, on their own, provide a reliable comparison between bodies.
When considering body-specific adjustments and fee variations, PSAA reviews the evidence supporting the work and considers whether the additional work was necessary and whether the proposed fee is reasonable and proportionate. We also compare similar submissions across audit firms and audited bodies to support consistency.
Audit Committees should expect their auditor to explain the scope of the audit, the factors affecting the fee and the basis of any additional charges. Where a body has concerns about its proposed scale fee or a fee variation, it should provide PSAA with the relevant evidence so that this can be considered through the applicable consultation or fee variation process.