Agenda item

The Director of Corporate Services presented the report.  At its meeting on 20 February 2017 the Authority opted into Public Sector Audit Appointments (PSAA) auditor appointment arrangements (resolution 6/16 refers), whereby PSAA was responsible for appointing an auditor to principal local government and police bodies that had chosen to opt into its national auditor appointment arrangements. This appointment covered the period 2018/19 to 2022/23.  The Authority therefore now needed to determine how to appoint its external auditors when that arrangement expired.

It was noted that there were 3 ways for a principal local government or police body to appoint its auditor for the five financial years from 2023/24:

1.    undertake a stand-alone individual auditor procurement and appointment exercise;

2.    undertake a joint audit procurement and appointing exercise with other bodies; or

3.    join PSAA’s sector led national scheme.

These options were considered in 2017 and appendix 1 set out the advantages / disadvantages of the options. At that time the Authority determined that pursuing the sector led approach represented the best option.  This was again proposed given the following advantages were still identified: -

·         avoid the necessity to establish an independent auditor panel (detailed requirements specified by the Local Audit & Accountability Act, 2014);

·         avoid the need to manage their own auditor procurement, including the costs of doing so;

·         benefit from PSAA undertaking a robust process to validate fee variation proposals; and

·         assuming a high level of participation, be able to support market sustainability and encourage realistic prices in a challenging market.

A local auditor must be appointed no later than 31 December in the financial year preceding the financial year of the accounts to be audited, i.e. for the audit of the accounts of the 2023/24 financial year, there must be a local auditor appointed by 31 December 2022.

PSAA’s sector led national scheme

In accordance with the Local Audit and Accountability Act 2014 and the Local Audit (Appointing Person) Regulations 2015 (the Regulations), PSAA formally invited all eligible bodies to join the national auditor appointment arrangements for the audit years 2023/2024 to 2027/2028 in its role as a specified appointing person. Attached as appendix 2 as now considered was the Prospectus that PSAA issued at the time.

A decision to become an opted-in authority must be taken in accordance with the Regulations by the Members of an Authority meeting as a whole, i.e. the full Authority.  The closing date to give notice to PSAA of the authority’s acceptance of the invitation was 11 March 2022.

Following the completion of the procurement of audit services (envisaged as August 2022), the auditor appointment process would be:

• publish the process for making individual auditor appointments for opted-in bodies from 2023/24 during spring/summer 2022;
• consult with opted-in bodies on proposed auditor appointments during the late summer/autumn 2022; and
• confirm all auditor appointments by 31 December 2022.

Audit Fee

The external audit fee for 2020/21 account was £39k. In recent years this fee had increased due to the additional requirements placed on auditors by the Financial Reporting Council. Audit firms had expressed a view that the existing fees were not sustainable and hence any procurement exercise was likely to result in higher fees, irrespective of how it was conducted.

Opting into a national sector led approach with PSAA provided some opportunity to limit the extent of any increases by entering in to a large-scale collective procurement arrangement and it was felt that a sector led approach was likely to result in the best compromise between sustainable fees and quality of audit.  It would also remove the costs of establishing an auditor panel, required under the other two approaches, which if selected, would need to be incorporated into future years budgets.

RESOLVED: - That the Committee propose that the full Authority accepted PSAAs invitation to opt into the national scheme.