Annual Report 2018
Public Sector Audit Appointments Limited (PSAA) is an independent company limited by guarantee incorporated by the Local Government Association in August 2014.
The Secretary of State for Communities and Local Government delegated a number of statutory functions (from the Audit Commission Act 1998) to PSAA on a transitional basis by way of a letter of delegation issued under powers contained in the Local Audit and Accountability Act 2014.
As a consequence of these delegations, for 2017/18 the company will continue to be responsible under transitional arrangements for appointing auditors to local government and police bodies, for setting audit fees and for making arrangements for certification of housing benefit subsidy claims.
Looking beyond 2017/18, the Secretary of State has specified PSAA as an appointing person for principal local government bodies from 2018/19, under the provisions of the Local Audit and Accountability Act 2014 and the Local Audit (Appointing Person) Regulations 2015.
- Public Sector Audit Appointments Limited (PSAA) monitors the performance of all its audit firms. The results of our monitoring provide audited bodies and other stakeholders with assurance that high-quality audits are being delivered. We define audit quality as compliance with our regulatory requirements and with professional standards. Our objectives are to:
- provide assurance that the firms have put in place systems and processes to deliver audit work of good quality; and
- provide information to inform the audit appointments we make.
- There are two strands to our monitoring:
- audit quality- applying our annual quality review programme (QRP) to the audit work undertaken on the 2016/17 financial statements; and
- regulatory compliance- reporting quarterly on audit firms’ compliance with our regulatory requirements as set out in the Terms of Appointment.
- The audit quality and regulatory compliance monitoring for 2017/18 incorporated a range of measurements and checks comprising:
- a review of each firm’s latest published annual transparency reports;
- the results of reviewing a sample of each firm’s audit quality monitoring reviews (QMRs) of its financial statements, Value for Money (VFM) conclusions and housing benefit (HB COUNT) work. Our review included assessing compliance with the HB COUNT guidance;
- an assessment as to whether we could rely on the results of each firm’s systems for quality control and monitoring;
- a review of the Financial Reporting Council’s (FRC) published report on the results of its inspection of firm audits in the private sector;
- the results of our inspection of each firm by the FRC’s Audit Quality Review team (AQR) as part of our commissioned rolling inspection programme of financial statements and VFM work;
- the results of each firm’s compliance with 15 key indicators relating to Terms of Appointment requirements;
- a review of each firms’ systems to ensure they comply with our regulatory requirements; and
- a review of each firm’s client satisfaction surveys for 2016/17 engagements.
- In the limited assurance regime, the measurements and checks comprise:
- the results of firms’ compliance with five key indicators relating to Terms of Appointment requirements;
- a review of firms’ systems to ensure they comply with PSAA’s regulatory requirements;
- the results of reviewing a sample of firms’ own internal QMRs of annual return work;
- an assessment as to whether we could rely on the results of each firm’s systems for quality control and monitoring; and
- a review of each firm’s client satisfaction surveys for 2016/17 work.
- This report summarises the results of the quality review process for 2018.