The fee variation relates to audit firms’ project costs linked to the backlog solution. Bodies and auditors should apply the relevant accounting and reporting requirements. Our determination will distinguish the charge from body-specific audit work.
We reviewed the submissions and will determine the fee variation before firms invoice bodies. PSAA will continue to challenge any separate fee variation submitted for individual audit work.
We will include the project cost fee variation in each body’s 2024/25 fee variation statement. If We have already issued the statement, we will issue a revised statement. Otherwise, it will include the charge in the original statement.
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.
| 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. |
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:
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.