Bodies and Audit Committees should receive from their external auditor a clear and transparent explanation of any proposed additional fee including the additional work undertaken and the reasons it was required.
The auditor should explain the nature and scope of the work undertaken, the audit risk, accounting issue or other requirement that gave rise to it, how the work relates to the Code of Audit Practice and why they consider that the work falls outside the work already covered by the scale fee and how the proposed additional fee has been calculated.
The explanation should focus on the circumstances and audit requirements that led to the additional work. Where additional effort has resulted from changes to the audit timetable, the availability or quality of information, or other issues encountered during the audit, the auditor should explain the circumstances, the impact on the audit and the steps taken by both parties to manage that impact.
The auditor should also be able to provide the additional hours worked in relation to the fee variation proposal, split by the grade of staff rate card published by PSAA.
Bodies and Audit Committees should also expect the auditor to demonstrate that the additional work was necessary and proportionate, and to distinguish it from time arising from the auditor’s own internal resourcing arrangements or inefficiencies. They should also expect auditors to explain how additional costs could be mitigated.
When we review a fee variation proposal, we consider the supporting evidence to assess whether the additional work was necessary, and appropriately linked to the audit requirements and risk, and whether the proposed fee is reasonable and proportionate.