Local authority audit fees ‘may be cut’

4 Dec 17

The audit fees paid by most local authorities will be cut by almost a quarter for the 2018-19 financial year if proposals put forward by Public Sector Audit Appointments are approved.

PSAA was set up following the demise of the Audit Commission to manage the audit contracts let by the commission.

It subsequently secured a new role procuring audits for those English local government and police bodies that elected to delegate their audit appointment function to a central body.

The vast majority of eligible bodies – 484 of a possible 493 – have chosen to sign up with PSAA.

In November, PSAA published a consultation on the fee scale for 2018-19, proposing a significant 23% cut in the fees charged.

PSAA chair Steve Freer told Public Finance that this reflected both the highly competitive bids from audit firms and reductions in PSAA’s own running costs.

“We’re formally consulting and we expect bodies to be supportive of that proposal,” he said.

Freer observed: “This follows a trend of significant reductions in audit prices.”

In 2012, while the Audit Commission was still in operation, fees were cut by 40% (although this partially reflected the end of the commission’s wider inspection activities), and a further 25% reduction was secured in 2014.

Freer added that he was “optimistic” that PSAA would be able to maintain the prices proposed for 2018-19 for at least the two subsequent years.

“We’re going to make every endeavour ­– having reduced fees by 23% if the consultation supports that – to hold that for as long as we possibly can,” he told PF.

Freer also stressed that, despite the proposed cut in fees, there would be no reduction in the quality of audits carried out.

“We’ve got a whole stream of work associated with making sure lower prices don’t lead to lower quality.”

Freer highlighted plans to shortly set up a local audit quality forum that would bring together audit committee chairs and chief financial officers in particular.

“We want to work with that constituency to make sure everyone is striving hard to ensure the quality of audit remains high and continues to underpin public confidence in the stewardship of the public bodies concerned.”

The consultation paper can be read here and the consultation closes on 15 January.

A decision on the scale of audit fees for 2018-19 will be made and announced before the end of March.

  • Vivienne Russell

    Vivienne Russell is managing editor of Public Finance magazine and publicfinance.co.uk

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