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.
Effective relationship management
Effective relationship management is a key component of audit quality. Satisfaction surveys are the most effective way of obtaining this information.
Previously surveys have been undertaken by the audit firms themselves and have sought the responses of client Chief Finance Officers (CFOs) to a relatively small number of high level questions. This year was the first under Appointing Person arrangements, and PSAA introduced a new approach which incorporated a number of important changes.
We commissioned the LGA’s Research & Information team to administer the survey to provide assurance about independence and confidentiality. The views of both CFOs and Audit Committee Chairs were sought, recognising the importance of the auditor’s relationships with both Management and Those Charged With Governance. A longer list of survey questions sought to probe more deeply into respondents’ experience of different aspects of the audit and the auditor’s performance. We surveyed all our bodies, and we received responses from 75 (15%) Audit Committee chairs and 193 (40%) Finance Directors. We reported the survey results in May 2020. A full copy can be found on our website: PSAA Quality of Audit Service feedback survey.Back to top
The response rate is lower than we anticipated, particularly given the number of delayed opinions.
We hope that response rates will rise in the future and that both CFOs and Audit Committee Chairs will see this mechanism as an important opportunity to provide feedback based on their front-line experience of the audit service. We have commissioned further research for the LGA to help us to improve survey response rates in future years.
The responses from Audit Committee chairs showed that:
- 81% agreed that in presenting the audit closure report the auditor clearly explained the work undertaken and conclusions reached;
- In cases where an additional fee had been proposed (41), audit committee chairs agreed that in 83% of cases the audit team had explained the reasons for this, and in 72% of cases this had been reported to the Audit Committee on a timely basis; but
- Of the 32 cases where the audit opinion was to be delayed, 56% reported that the delay had not been communicated on a timely basis.
The responses from Finance Directors showed that:
- 74% said that the auditor could be approached as a sounding board when required;
- 25% did not think the audit team had the skills to deliver the audit;
- 70% thought they had been kept informed of audit progress throughout the year;
- In those cases where an additional fee had been proposed (148), 62% agreed this had been reported on a timely basis; and
- Of the 84 cases where the audit opinion was to be delayed, 58% reported that the delay had not been communicated on a timely basis.
We have shared the information with firms to assist in improving the quality of audit services. All firms wanted the additional comments provided and information on a more granular level than is available from an anonymous survey. Three of the comments made are provided below, illustrating the range of responses provided:
- ‘A frustrating year due to change in audit approach, especially around asset valuations and due to a new team. Likelihood that audit would not complete in time communicated very late’;
- ‘The first year audit from a new provider can be challenging. However in this instance the transition was seamless’; and
- ‘The auditors and councils are subject to a huge amount of regulation and the whole process of producing a statement of accounts and auditing them is expensive. We end up with a product that is not meaningful to our residents or councillors’.
Overall, the survey results show that 80% of respondents were content with the quality of the audit service provided, but the known tensions in the local audit world around resourcing and property and pension valuations were highlighted. The nature of the survey means that it is difficult to draw meaningful comparisons between firms but there is work to be done by all to achieve improvements. Together with the other elements of our monitoring the survey results provide a strong evidence base from which firms will be able to develop tailored improvement plans where appropriate.Back to top