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 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.
PSAA approach to audit quality monitoring
Our approach is grounded in the International Auditing and Assurance Standards Board (IAASB)’s Framework for Audit Quality. This is widely regarded as a definitive statement on overall audit quality. We have taken the attributes the IAASB expects to be present in a quality audit and distilled them into three tests, which we use to consider the quality of audits and auditors under our contracts:
- adherence to professional standards and guidance;
- compliance with contractual requirements; and
- relationship management.
Table 1 shows the main evidence sources that PSAA uses to monitor audit quality for the three tests to provide a rounded view of audit quality.
Table 1: PSAA’s audit quality monitoring
|PSAA test||Evidence source|
|Adherence to professional standards and guidance||Professional regulatory reports; and
Firm transparency reports
|Compliance with contractual requirements||Contract performance indicators
Method statement monitoring
|Effective relationship management||Satisfaction survey scores|
The relationship between the IAASB framework and our audit quality monitoring arrangements is shown in the Table 2 below. Audit quality formed a core part of the evaluation of tenderers in our 2017 audit procurement. Tenderers were encouraged to have regard to the IAASB Framework in the development of their submissions.
Table 2: IAASB Framework elements
|Key element/PSAA test||Adherence to professional standards and guidance||Compliance with contractual requirements||Effective relationship management|
|Values, ethics and attitude||Y||Y||Y|
|Knowledge, skills, experience and time||Y||Y||Y|
|Audit process and quality control procedures||Y||Y|
|Professional regulators’ reports||Y|
While responsibility for providing audits of appropriate quality rests ultimately with an appointed auditor, audit quality, efficiency and effectiveness are a shared responsibility: for appointed auditors and audit firms; for PSAA as Appointing Person; for chief finance officers (CFOs) and audit committees; for regulatory and supervisory bodies; for the Comptroller & Auditor General (C&AG) and the National Audit Office (NAO); and for government. The IAASB framework notes that all parts of the financial reporting chain have a role in contributing to and encouraging an audit environment that supports provision of an audit service of the expected quality.Back to top