We strongly believe that reducing the volume of local audit work is essential to delivering a more proportionate audit that complies with the Code of Audit Practice (the Code). This should be a key objective in reforming both the accounting and auditing frameworks.
Ultimately, the amount of audit work will influence the overall audit fee, alongside the fee rates determined through procurement processes. When setting scale fees, we also make adjustments for bodies where there are confirmed known changes in the level of audit work required, supported by comparative analysis across groups of bodies.
Once established, the Local Audit Organisation (LAO) will have greater flexibility to set and vary audit fees than is currently available to PSAA. Crucially it will be able to influence the nature and extent of audit work that is required. It will also consolidate functions that naturally complement the fee-setting process, such as responsibility for the Code of Audit Practice and regulating auditor performance.