This consultation invites comment on PSAA’s proposals for setting the fee scale for 2025/26 audits of opted-in bodies.

We are required under local audit regulations to consult on and set the 2025/26 fee scale by the end of November 2025. Audit work under this fee scale is likely from March 2026 to the backstop date 31 January 2027 under the dates proposed in a statement on the local audit backlog published by the Ministry of Housing, Communities and Local Government (MHCLG) in July 2024 and confirmed in the Accounts and Audit (Amendment) Regulations 2024.

Our 2025/26 fee scale proposals include an average increase of approximately 4% on the 2024/25 scale fees to cover a contractual inflationary (2.8%) increase payable to audit firms for 2025/26 and confirmed changes in ongoing audit work based on information received since we set the 2024/25 scale fees. Incorporating fee changes into scale fees provides more certainty and without this consolidation they would be payable as fee variations.

Since 2019 the local audit framework has faced significant challenges, including a mounting backlog of outstanding audits, and ongoing capacity pressures across the system. In response, the Government has set statutory backstop dates and launched a wide-ranging reform programme. This includes creating the Local Audit Office (LAO) to streamline and simplify the system, providing stronger accountability and audit that is proportionate and relevant. We have been closely engaged in these developments and remain committed to working with partners to support their successful delivery.

Our strong view is that work on reforming accounting and auditing frameworks must reduce the volume of local audit work needed to deliver a more proportionate Code of Audit Practice (Code) compliant audit. We welcomed the actions MHCLG has taken to address delayed local audit opinions and expressed our strong support for the Government’s commitment to overhaul the local audit system to enable bodies and taxpayers to get better value for money.
We recognise the significant financial and wider pressures on bodies and understand that additional audit fees are an unwelcome additional budgetary pressure, and only propose increases where additional recurring work is required, or in line with contractual requirements. We prepare our information paper for 2024/25 audits to provide information to audited bodies on changes to auditing and accounting standards and outline the impact that they might have on audit fees. This is intended to support discussions between bodies and auditors on fee variations for 2024/25 audits and provide more context for the 2025/26 Scale Fee consultation. It also provides information on how bodies can work to mitigate against additional audit fees.

Our fees research considered the impact of other changes in audit and accounting requirements applicable for the first time for 2024/25 and 2025/26. Changes to IFRS 16 (Leases) and ISA (UK) 600 (Group Audits) are both applicable from 2024/25 for local government audits. Changes to the Code of Accounting Practice on the application of IAS 16 (Property, Plant and Equipment), IAS 36 (Impairment of Assets) and IAS 38 (Intangible Assets) are applicable to local government audits from 2025/26. We concluded that we are unable to consolidate additional fees into the fee scale at this point as the fees for individual bodies will be highly dependent on a body’s arrangements and the level of work required. We will need to evaluate the viability of incorporating additional fees in a future fee scale once we have enough information.

We welcome comments from audited bodies and other stakeholders on the proposed 2025/26 fee scale. The consultation will close on Monday 13 October 2025 at 5pm.

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* 1. Contact details

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* 2. Please select your role

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* 3. Do you support the proposals in the consultation for the fee scale for 2025/26 audits? If you wish to add comments please provide further information at question 6

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* 4. Do you agree with the proposed elements of the 2025/26 fee scale? If you wish to indicate which proposed elements you agree/disagree with please provide further information at question 6

2025/26 fee scale - proposed elements:
A - The scale fees set for 2024/25
PLUS:
B - Adjustments for specific opted-in bodies, where updated information is now available (does not apply to all bodies)
C - Contractual adjustment of 2.8% for inflation

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* 5. Are there other factors you think should be reflected in the 2025/26 fee scale? If there are other factors, please detail these in the comments box below

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* 6. Any other comments you would like to make?

Thank you for your response.

The PSAA Board will consider consultation responses carefully in determining the final fee scale for 2025/26. We will publish the final 2025/26 fee scale on our website by 28 November 2025.

If you have comments about the way this consultation has been conducted, these should be sent by email to workandfeesconsultation@psaa.co.uk.

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