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.