LGA - Procurement of audit services delivers outstanding results

22 Jun 2017 10:28 AM

Local government and police bodies throughout England will pay reduced fees for audit services following the results of a highly successful procurement process undertaken by Public Sector Audit Appointments Ltd (PSAA).

Aggregate savings are expected to exceed £6 million per annum, equivalent to a reduction of approximately 18 per cent in the scale fees payable by local bodies.

The results of the process announced on 20 June 2017 involve the awarding of the following contracts:

• Lot 1 (value: approx. £14.4 million per audit year) awarded to Grant Thornton LLP;
• Lot 2 (value: approx. £10.9 million per audit year) awarded to EY LLP;
• Lot 3 (value: approx. £6.6 million per audit year) awarded to Mazars LLP;
• Lot 4 (value: approx. £2.2 million per audit year) awarded to BDO LLP;
• Lot 5 (value: approx. £2.2 million per audit year) awarded to Deloitte LLP; and
• Lot 6 (value not pre-determined) awarded to a consortium of Moore Stephens LLP and Scott-Moncrieff LLP.
• These contracts will cover a five-year period commencing with the audit of accounts for 2018/19. PSAA has an option to extend the contracts for a further two-year period, to a total of seven years, if it chooses to do so.

Steve Freer, Chairman of PSAA, said:

"We are delighted by the results of the tender process and the appointment of six experienced and well respected firms. At the outset our objectives included maintaining high standards of audit quality and attracting very competitive prices. We are extremely pleased by the outcomes on both criteria.

"The process has also encouraged firms to think creatively about opportunities to achieve social value benefits. As a result it is clear that the contracts awarded will lead to the creation of 400 new finance apprenticeships over the five-year period - another terrific outcome."

The Local Government Association (LGA) is also delighted by these results. The LGA lobbied successfully for changes to the legislation to allow public bodies to procure their external auditors through a sector-led body. The LGA then established PSAA for that purpose.

LGA Chairman, Lord Porter, said:

“It’s been a long journey, but I am extremely pleased that so many local authorities will reap such positive rewards – in terms of both quality and value for money. Collectively, councils are set to save millions after they placed their confidence in the PSAA to commission audit services on their behalf. This has been a longstanding project of the LGA and demonstrates the power of the sector-led model.

“The outcome is testament to the thoughtful and robust approach developed by PSAA which has clearly proved attractive to both councils and audit firms."

Notes to editors

1. Public Sector Audit Appointments Ltd. (PSAA) is an independent company limited by guarantee, established by the Local Government Association.
2. In July 2016, PSAA was appointed by the Secretary of State for Communities and Local Government as the Appointing Person or sector-led body for the independent appointment of auditors to principal local government and police bodies in England under powers contained in the Local Audit & Accountability Act, 2014.
3. Membership of the national Appointing Person scheme, developed and led by PSAA, is optional. Of 493 eligible local bodies, 484 have opted into the scheme. As well as benefiting from the tender results outlined in this release, scheme members will save the time and costs associated with establishing and maintaining an independent auditor panel to oversee the procurement and ongoing management of a local auditor appointment.
4. In due course PSAA will begin a consultation process leading to the appointment of named audit firms to each individual authority. All appointments will be finalised by 31 December, 2017.
5. The appointments process will then be followed by a consultation focusing on the change to scale fees payable by authorities. Current estimates point to a possible fee reduction of the order of 18 per cent.