Agenda item

The Director of Corporate Services presented the External Audit Fees to Members which provided an update on the proposed audit fees from 2023/24 advised by Public Sector Audit Appointments Ltd (PSAA) following the appointment process reported to the CFA in December 2021.

The CFA accepted the Public Sector Audit Appointments invitation to opt-in to the national scheme in December 2021. Following a process, the auditors Grant Thornton, were appointed for a further five years from 2023/24. The procurement took place against the challenging backcloth of a troubled audit profession, a turbulent market and a local audit system facing unprecedented difficulties including large volumes of delayed audit opinions.

The Committee was advised that in Autumn 2023, the PSAA would consult on the proposed scale of audit fees payable by bodies in respect of the audit of 2023/24 accounts and to expect increases of the order of 150% on the total fees for 2022/23.

Audit requirements had increased in recent years as a result of increased regulatory challenge, changes to the audit work required under the Code of Audit Practice and updated auditing and financial reporting standards. On the 19 September, the Chief Executive of the PSAA advised the Authority of the proposed fee for 2023/24 of £92,606; representing a 151% increase. Alongside this, the PSAA launched a consultation on the fee scales which the Service responded to.

The consultation on the 2023/24 fee scale was taking place at a time of change in the local audit system. The audit profession had been subject to high levels of scrutiny in recent years following several widely reported financial failures in the private sector and increase in reported Section 114 notices across the sector. It was noted that the 2023/24 auditor appointments and fee scale was due to be published on 30 November 2023.

The financial pressure would be included in the 2024/25 budget report to the Authority in February 2024.

The Director of Corporate Services thanked the External Audit Team for their work.

Georgia Jones, Key Audit Partner, Grant Thornton explained that the PSAA set the Audit fees which were also affected by an annual increase, changes in the regulatory environment, work for the valuation of land and buildings, and work around pension figures. New audit standards had been introduced such as ISA 315 regarding IT controls and ISA 240 concerning fraud which created additional work. Additionally, there were recruitment difficulties due to the specialist nature of the work and a limited number of accredited individuals who were able to sign-off accounts.

The Chair stated that external audit fees was something well-rehearsed in all councils and County Councillor Singleton who was present was the Vice-Chair for Audit Risk and Governance at Lancashire County Council.

County Councillor Singleton commented that discussions had taken place at Lancashire County Council regarding audit risk and governance in relation to increased fees. He acknowledged that audit specialism was becoming a scarce skill.

County Councillor Hennessy advised that she understood the background and history of audit and how the process had changed, affecting fees. Georgia Jones commented that Audit fees were currently lower than they were in 2011 when the Audit Commission ended.

Resolved: That the Committee noted the proposed 2023/24 audit fees and response to the consultation.