Source · Select Committees · Public Accounts Committee
Recommendation 16
16
Deferred
New local audit contracts significantly increase fees, improving financial viability for providers.
Conclusion
We recommended in 2021 that the Department ensured PSAA’s procurement exercise for the next round of audit contracts covering 2023–24 to 2027–28 financial years bring fees into line with the costs of work and be appropriately funded. The procurement completed in October 2022, and the Department told us that the new contracts made involvement in local audit ‘much more financially viable’ than it had previously been.43 PSAA’s procurement strategy for the next round prioritised quality over price, and on announcing the outcome of the process told local government to expect fee increases of 150% in the first year of the new contracts.44 Local audit provider Grant Thornton described the more sustainable fee levels as a cause for optimism, while Ernst and Young saw it as a ‘starting point’ for additional recruitment and specialist training.45
Government Response Summary
The government agrees with the committee's observation on audit fees and market viability, confirming that the FRC plans to progress the Local Audit Workforce Strategy and will provide a further update on determined actions before the end of 2023.
Government Response
Deferred
HM Government
Deferred
3.1 The government agrees with the Committee’s recommendation. Recommendation implemented 3.2 The Permanent Secretary has written to the Committee alongside this Treasury Minute setting out FRC’s plans to progress the Local Audit Workforce Strategy and will write again before the end of 2023 setting out the actions the FRC, working collaboratively with system partners, has determined are necessary across the local audit system.