While we do not agree with some of the recommendations of the Redmond Review, and others need further consideration, in our response to the review we outlined that a number of quick actions should be taken as soon as possible to have an immediate effect on the audit market.
About the Local Government Association
1. The Local Government Association (LGA) is the national voice of local government. We are a politically led, cross party membership organisation, representing councils from England and Wales.
2. Our role is to support, promote and improve local government, and raise national awareness of the work of councils. Our ultimate ambition is to support councils to deliver local solutions to national problems.
3. We welcome the opportunity to comment on this consultation and support of the proposals in it. This response has been cleared by lead members of the LGA’s Resources Board.
Introduction
4. There have been a series of changes to audit requirements affecting the conduct of all or most audits, leading to more audit work being carried out. We have previously argued that it would be much better if such changes could be incorporated in overall scale fees rather than through additional in year fee variations. The requirement to set scale fees before the start of the audit year means that this has often not been possible, and this has meant increasing uncertainty over fee levels and a more long drawn out fee variation process.
5. While we do not agree with some of the recommendations of the Redmond Review, and others need further consideration, in our response to the review we outlined that a number of quick actions should be taken as soon as possible to have an immediate effect on the audit market. The proposals in this consultation fall into that latter category and we are pleased that the Government is bringing them forward for consideration.
6. We welcome the £15 million in additional funding that the Government is allocating in 2021/22 to help local bodies to meet the anticipated rise in fees for 2021/22 audits. These costs will be ongoing so the funding should be made permanent rather than one off.
7. Good communications and good information on all fee variations will help the process. This includes communications between audited bodies who are having similar discussions with auditors. This is a factor that it would be easy to overlook, particularly if the problem is viewed solely through the lens of the auditor.
Consultation questions
8. Q1 Do you agree with the above proposal to extend the regulatory deadline by which the scale fees need to be set to enable the appointing person (PSAA Ltd) to take into account more up-to-date information?
9. Response. Yes. We agree with the proposal. The new deadline should be set so as to allow time for as much information as practical to be taken into account, while being early enough for local authorities to include in forward budget plans. The deadline is a “latest” date at which scale fees should be set and if all information were to become available earlier scale fees should be set ahead of the statutory deadline.
10. Q2. Do you agree with the above proposals to enable the appointing person to consult on and agree standardised fee variations to be applied to all or certain groups of principal bodies?
11. Response. Yes. Our response to the PSAA consultation on fee variations was supportive of this proposal.
12. Q3. National fee variations could only be implemented in prescribed circumstances, which would be defined in the regulations. Do you have any comments on the example circumstances outlined in paragraph 8, or any additional circumstances that should be considered?
13. Response. As above, we would refer to our response to the PSAA consultation on fee variations in November 2020. In that we stated that we agree that in principle where there are variations that can be identified as national variations these ought to be dealt with nationally.
14. Q4. Do you have any comments about the above proposals to enable some fee variations for additional elements of work to be approved during the audit, noting that the appointing person’s scrutiny processes to review the proposed additional fees would operate in all cases in the usual way?
15. Response. This approach seems to be sensible. PSAA scrutiny will remain essential, although it will be important that the process is proportional to the value of fees. As stated above, good communications between all parties on variations is very important and PSAA clearly has a leading role to play in this.
16. Q5 Do you agree with the above proposal that the appointing person is able to appoint auditors for the period that it considers to be the most appropriate, up to the maximum length of the appointing period subject to consultation with the relevant bodies?
17. Response. Yes, we support this proposal.
18. Q6. Finally, we would also welcome any more general comments on the proposals, including any comments relating to equalities impact or any potential for unintended consequences of any of the above proposals.
19. Response. Please see comments made above in the introduction (paragraphs 4 to 7) to this response.
Contact:
Bevis Ingram
Senior Adviser Finance
Phone: 079 2070 2354
Email: [email protected]