The bid prices submitted in response to PSAA’s 2022 audit services procurement reflected a significant increase compared to our previous procurement in 2017. The audit industry has faced major challenges in the intervening period. In addition local audit faces several distinctive difficulties which have resulted in a less competitive market.
In autumn 2023 PSAA will consult on the proposed scale of audit fees payable by bodies in respect of the audit of 2023/24 accounts. At this stage our advice to bodies is to anticipate a major re-set of total fees for 2023/24 involving an increase of the order of 150% on the total fees for 2022/23.
The anticipated fee increase is on the basis that the volume of work across the two years of 2022/23 and 2023/24 is similar. However if the volume of work changes, then the total fee will vary accordingly. For example if a national or local factor triggers an increase or decrease in the volume of audit work then the fee will vary accordingly. This is illustrated below using an example total audit fee (scale fee + approved fee variations) of £100k.
- 2022/23 total fee £100k – no change in work required for 2023/24 – total fee c.£250k
- 2022/23 total fee £100k – 10% increase in work required for 2023/24 – total fee c.£275k (£110k uplifted by 150%)
- 2022/23 total fee £100k – 10% decrease in work required for 2023/24 – total fee c.£225k (£90k uplifted by 150%)
We appreciate that the extent of this likely increase in audit fees will pose a significant funding challenge for local bodies already facing a daunting range of financial pressures. We have raised this concern with DLUHC.