Audit Contract Monitoring Report 2023/24

Effective relationship management

113. Local audit plays a vital role in strengthening corporate governance within public bodies and enhancing public confidence in organisations delivering public services.
114. A cornerstone of this process is effective communication between auditors, management, and Those Charged With Governance (TCWG). Constructive dialogue fosters a relationship that supports transparency, accountability and continuous improvement.
115. Auditors are expected to manage relationships with professionalism and integrity. While open and constructive engagement with management is essential, enabling valuable insights and observations, it must be carefully balanced. Auditors must maintain professional scepticism and objectivity, avoiding any perception of over-familiarity that could compromise their independence or the reliability of their assessments.

Client feedback on the 2023/24 audits

116. In addition to monitoring the firms’ delivery of the communication commitments described within their Method Statements, we seek feedback from each body annually via an online survey, alongside responding to their ad hoc enquiries.
117. For the 2023/24 audits, the first under the second appointing period, we evolved our approach in the following ways:

• We sought feedback shortly after each body’s audit opinion was issued. Our aim was to gain more timely feedback whilst the audit experience was fresh in bodies’ minds.
• We redesigned the survey questionnaire (informed by feedback from our Advisory Panel) with firm-specific questions to triangulate the delivery of specific commitments such as the extent to which bodies took advantage of the opportunity to meet privately with the auditors.
• We introduced a separate, shorter survey for those bodies who did not receive an audit opinion by 31 March 2025, to ensure they had the opportunity to share views of their audit experience.

118. We again commissioned the LGA’s Research and Information team to manage the survey to provide assurance about independence and confidentiality. We sought the views of both Directors of Finance and Audit Committee Chairs, recognising the importance of the auditor’s relationships with both management and TCWG.
119. We have summarised the key findings below. The full report and a summarised version are available on our website.
120. A total of 282 bodies responded out of a possible 448 (63%). The number of surveyed bodies is lower than the total number of opted-in bodies (461), as we sought a combined response from police and fire authorities with a shared finance function. 39 of these bodies had not received their audit opinion by 31 March 2025.
121. The overall response rate to the main survey from Directors of Finance was 47% (193/409) and from Audit Committee Chairs was 31% (118/378). Table 14 shows client feedback responses and the extent to which bodies’ audit service met expectations compared to the first appointing period.

Table 14: Overall responses received and extent to which the audit service delivered met expectations to a great or moderate extent

	2023/24	Average % 2019/20 to 2021/22*
Audit Committee Chairs percentage who responded	31%	26%
Audit Committee Chairs extent to which audit service aligned with expectations	94%	77%
Directors of Finance percentage who responded	47%	43%
Directors of Finance extent to which audit service aligned with expectations	85%	63%

122. We sought views on audit completion dates, auditor’s communications and timely reporting of key issues, the usefulness of the Auditor’s Annual Report and VFM arrangements, committee meetings, and proposals to tackle the audit backlog.
123. There was positive feedback on an improved audit experience against previous years; the completion of audits by the target date; communications overall; audits delivered by new auditors including new entrants; timely reporting of significant weaknesses; and the auditor’s performance at Audit Committee meetings.
124. Concerns expressed related to the need for improved communications on fee variations, fees and infrastructure assets; the shortage of experienced auditor resources; the levels of additional review and scrutiny that firms build into their processes on valuations and pensions; and a requirement for better planning and guidance from audit teams.
125. Additional comments received about the backlog solution emphasised the need to provide clarity on building back assurance whilst ensuring local audit offered value for money; the importance of a focus on future resources and training; and the impact of local government reorganisation on local audit.
126. The shorter tailored survey was issued to 39 opted-in bodies who did not receive their 2023/24 audit opinion by the end of March. 25 out of the 39 bodies (64%) responded to the survey. The overall response rate from Directors of Finance was 31% (12/39), and for Audit Committee Chairs was 38% (13/34).
127. The results for this survey reflect a broadly positive audit experience, with 83% of Directors of Finance and 69% of Audit Committee Chairs stating that the service met expectations. Positive experiences were noted in communication, timely reporting of significant weaknesses, and auditor performance at Audit Committee meetings.
128. Key concerns included communication around fees and infrastructure assets, the need for better planning and guidance, and maintaining confidence in financial management and audit integrity. Additional feedback called for improved engagement, clearer guidance, and sustainable solutions to rebuild assurance and avoid future backlogs.
129. Respondents shared that delayed audit opinions were mainly due to prior year issues, and other factors such as finance team resourcing, objections and issues related to backlog arrangements. Communication was generally strong, with nearly all respondents confirming they were informed of the reason why their opinion was delayed.
130. We will discuss the themes and areas of improvement indicated by the feedback with each firm, and will continue to raise the concerns expressed by key stakeholders in local audit to inform decisions made about the future of the local audit regime and to support ongoing improvements. In addition to publishing this report on our website, we will reference the report in our e-bulletin which we issue to all opted-in bodies, appointed firms, and key local audit stakeholders.  
131. We log requests sent to our general enquiries inbox to monitor themes and ensure every email receives a response. Table 15 provides a summary of the number of emails received per firm from August 2024 to July 2025. The enquiries, mainly from audited bodies, cover a range of topics including audit and fee-related queries, objections and complaints.

Table 15: Number of emails received into PSAA’s general enquiry inbox presented by firm, from 1 August 2024 to 31 July 2025

Firm	Number of emails received
Azets	3
Bishop Fleming	7
Ernst & Young*	34
Forvis Mazars*	20
Grant Thornton*	50
KPMG	8

132. We invited all six firms to comment on their 2023/24 audit experience and received the following responses:

Forvis Mazars commented:

“We are pleased to see PSAA’s Audit Contract Monitoring Report for the 2023-24 audits along with the LGA’s client survey. These reports show an overall positive assessment of the work delivered by our teams. The 2023-24 year has been particularly challenging for both audited bodies and auditors alike as we worked towards the backstop date in February 2025. The work required to meet this deadline, soon after the December 2024 deadline for earlier years, put significant pressure on both accounts preparers and audit teams alike. In this context, the positive feedback these reports provide is welcomed. Notwithstanding the overall positive findings in the PSAA survey, we have identified some areas for improvement. We will take action to address these matters as quickly and effectively as we can.

We have worked with stakeholders, including MHCLG, the FRC and the NAO, over the last year to understand how assurance can be rebuilt, and to contribute to the development of the guidance to auditors to underpin this. We are now committed to supporting the delivery of the programme to rebuild assurance across the sector over the next few years. We recognise the critical importance of supporting the sector to get back to a smooth and timely audit process as soon as possible. We will continue to deliver our VFM reporting requirements in a timely way, providing constructive recommendations to address weaknesses, including those relating to financial reporting.”

Azets commented:

“2023/24 was the first year of Azets’ involvement in the PSAA Audit Contract and, as reflected in the Audit Quality Monitoring Report, this came at a time of significant system-wide challenges to audit delivery. In particular, the level of historic disclaimed audit opinions had a significant impact on our approach to planning and delivery of the 2023/24 audits.

Despite the system-wide challenges, we were able to work closely with PSAA and the bodies to which we are appointed auditors to deliver contractual requirements, issuing disclaimed opinions by the backstop dates where bodies impacted by a previous disclaimer had published auditable accounts, and unmodified opinions for bodies not impacted by a previous disclaimer.

We welcome the steps taken to date aimed at addressing the audit backlog, including the introduction of statutory backstop dates, plans for further reform of the local audit system and increased clarity on the audit approach for rebuilding assurance for bodies impacted by a historic disclaimed audit opinion. We will continue to work closely with PSAA and audited bodies as we commence the process of rebuilding assurance in 2024/25.”

Back to top