Frequently Asked Questions

PSAA’s role is to ensure that the proposed fees are evidence-based, transparent and proportionate to the audit requirements.

Decisions about whether additional costs qualify for government funding under the New Burdens assessment are outside our remit.

Where Government has determined financial support is appropriate, including support relating to rebuilding assurance work and audit firms’ central project costs, MHCLG has announced the relevant funding arrangements separately.

PSAA has no power under the Local Audit and Accountability Act 2014 or the Regulations to make arrangements or appointments for assurance on grant certification claims and returns.

Certification requirements for Housing Subsidy are set by the Department for Work and Pensions (DWP) and delivered under a tri-partite agreement between DWP, the local authority, and the supplier firm. These requirements are outside the scope of the Code of Audit Practice.

However, the auditor of a local authority’s financial statements will need to obtain assurance over accounting entries related to benefit payments. We will continue to monitor developments and assess the impact of any changes on this work.

PSAA has a robust process to review all fee variations submitted. The process is carried out diligently in line with the expectations of the Local Audit (Appointing Person) Regulations 2015 (Regulation 17(2)). PSAA is conscious that when a determination is made it is legally binding on both an auditor and the audited body, and that it is public money being transacted. This can take some time, especially as the balance between scale fees and the volume of additional fees was never envisaged to be as it is now. It has brought in additional capacity to help process the increased volume.

Other factors include that firms can take time to submit variations and supporting information, and arranging a meeting with the body can sometimes take a while to achieve.

The process is not protracted if information provided by the auditor is sufficient to enable PSAA to comply with its statutory duties in assessing a fee variation. A change in February 2022 to the Local Audit (Appointing Person) Regulations enables the scale fee to be set in November, closer to the start of audit work the following year. This should lead to a reduction in the number of audits that require scale fee variations. If necessary, in the case of significantly protracted audits we can approve interim fee variations.

A newly established eligible body has the right to opt in by giving notice to PSAA.

An eligible body who was invited to join but declined only has the right to request to become an opted-in authority.

The notice must confirm the body’s decision to opt in, and must specify the body’s postal address. The body will become an opted-in authority for the remainder of the appointing period on the date the notice is received by PSAA.

New bodies which meet the definition of smaller authority (s6 of the Local Audit and Accountability Act 2014) where the higher of the authority’s annual gross income and expenditure does not exceed £6.5m up to 2024/25 and £15m thereafter, fall within the arrangements of the Smaller Authorities Audit Appointments Limited.

The audit fee will reflect the volume of work done. For bodies where fees relate only to VFM arrangements and the issue of a disclaimer opinion, there will be no separate scale fee charge.

For all other fee variations, the approach will depend on the specific circumstances of each body. Please note that, in the case of a disclaimed audit, we will separately assess any fees associated with audit work undertaken in response to elector queries and objections.

The requirement for joint committees to produce statutory accounts ceased after production of the 2014/15 accounts and they are therefore not listed in Schedule 2 of the Local Audit and Accountability Act 2014.

Joint committees that have opted to produce accounts voluntarily and obtain non-statutory assurance on them need to make their own local audit arrangements as they are not eligible to join the PSAA scheme.

We anticipate that senior members of the audit team will participate in key meetings throughout the year, such as those where the audit plan or findings are being presented. Attendance at other meetings will be determined collaboratively, based on the nature of the business being discussed and through agreement between the organisation and the Key Audit Partner.

Please email contractmanagement@psaa.co.uk if you need any assistance from PSAA.

We considered relevant changes in accounting and auditing requirements for 2025/26 and 2026/27. We found insufficient evidence to support a sector-wide scale-fee adjustment for these changes.

For IFRS 16, the additional audit work may vary depending on factors such as the number and complexity of lease arrangements, the quality of the underlying records and the audit evidence available. We also expect some of the additional work to be associated with initial implementation and therefore not to recur at the same level in subsequent years. It is not yet possible to identify reliably what proportion of the additional work will be recurring.

Where IFRS 16, ISA (UK) 600, or another accounting or auditing change results in necessary additional work outside the assumptions underpinning the scale fee, the auditor may propose a fee variation. Auditors should discuss the expected scope and cost of the work with the audited body as early as possible and provide appropriate evidence to support any fee variation.

Once sufficient evidence is available to demonstrate a recurring and quantifiable impact, the Local Audit Office may wish to consider how those costs should be reflected within its future fee regime.

Firms and key audit partners must be registered with the ICAEW to provide local audit services, in accordance with the Local Audit and Accountability Act 2014. The quality of the firms’ work will be subject to scrutiny by both the ICAEW and the Financial Reporting Council (FRC). The FRC and the ICAEW have their own enforcement procedures where an audit does not meet the regulators’ quality standards.

PSAA will monitor that firms maintain the appropriate registration.

The Ethical Standard issued by the FRC precludes contingent fees. A contingent fee basis includes any arrangement made at the outset of an engagement under which a specified commission on or percentage of any consideration or saving, is payable to the firm upon the happening of a specified event or the achievement of an outcome (or alternative outcomes).

PSAA’s audit contracts cover an NAO Code of Audit Practice audit of opted-in bodies only. PSAA has no power under the Local Audit and Accountability Act 2014 or the Regulations to make arrangements or appointments for assurance on grant claims and returns.