Why don’t audit fees reduce after the first year enabling audited bodies to benefit from firms’ efficiency gains?

The Scale Fee represents our best estimate of the cost of delivering a standard audit. We expect that general first-year costs are incorporated within the firm’s overall bid rate or otherwise absorbed by the firm. In cases where exceptional additional costs arise, such as auditing a PFI scheme, these are addressed through the fee variation process. Such variations are applied as additions to the Scale Fee rather than as part of the Scale Fee to be reduced in subsequent years.