If we decide to make local arrangements, can we reduce the audit services fee if the audit opinion is not delivered by the statutory publishing date, and can we specify what the audit covers?

The terms of the contract through which an auditor is appointed by local arrangements will determine how the service is provided and the remuneration arrangements.

The Ethical Standard issued by the FRC in December 2019 precludes contingent fees on audit engagements. 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).

Whether an auditor is appointed by PSAA or by local arrangements, the specification of a local audit is fixed. It is determined by the requirements of the:

• NAO’s Code of Audit Practice which sets the scope of the audit;
• Code of Practice on Local Authority Accounting published by CIPFA/LASSAC which sets the format of the financial statements;
• HM Treasury in respect of the arrangements for Whole of Government Accounts; and
• FRC who regulate the work of the auditor in the application of International Auditing Standards.