Frequently Asked Questions

The fee variation covers central project work that firms carried out to support the backlog solution. This includes developing approaches to disclaimed opinions and build-back assurance, preparing guidance and documents, training audit teams, assessing portfolios, and managing added risks and resources. Firms cannot assign this work reliably to individual audits.

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 its assessment, the firm should share the estimate and supporting assumptions with the relevant body, and we will share the estimate with MHCLG. This will give bodies early sight of the expected costs and allow them to discuss the scope and assumptions with their auditor.

We will use each estimate as a baseline when reviewing build-back fee variations already received and future proposals.

Our review will include:

• a scope check to exclude firm-wide work already covered by the central project cost fee variation; 
• an estimate check to compare the proposal with the expected work, hours, staff grades and timing; 
• an evidence check to confirm what work was completed, why it was needed and how the cost was calculated; and 
• a cross-firm comparison of similar work, taking account of body type, audit complexity, the number of disclaimed years and the work undertaken. Cross-firm averages will act as a challenge indicator. 

We will investigate significant differences and require firms to explain and evidence them. We will also consider the body’s comments. If the evidence does not support all or part of a proposal, we will seek further information and reduce or reject any unsupported amount. We will exclude costs already recovered through the central project cost fee variation before determining the fee.

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.

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.

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.

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.

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 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.

The percentage method keeps the charge proportionate to the scale fee and received more support than opposition in the consultation.