Independent Review and Recommendations for PSAA Preparations
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7 March 2024
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New Chair for PSAA
Touchstone Renard independent report
Contract Monitoring Reporting from 2023/24
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Steve Freer stepping down after 9 years
Bill Butler appointed by LGA (IDeA Board)
LGA Press Notice
Background: Non-executive Director and Chair of Finance and Investment
Committee at The Law Society as well as the Non-executive Director and
Chair of the Audit and Risk Committee at Gangmaster.
Previous roles as an Independent Director of GPDF Ltd; Chief Executive
of the UK Security Industry Authority and Director of Corporate Services at
the Gambling Commission.
Prior to that he was Head of Finance at the Healthcare Commission; and
previously worked for the Audit Commission
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Appointed Touchstone Renard in April 2023 to:
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review, assess and comment on the effectiveness of our external
communications and engagement activities
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provide independent insight informed by external stakeholder feedback
on whether we could have adopted different or better approaches to our
preparations
•
Overall found that PSAA had communicated and engaged effectively
throughout the project:
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121 eligible bodies: between 82% and 92% felt PSAA had been ‘very
effective’ or ‘somewhat effective’
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10 audit firms: most praised PSAA’s level of engagement, openness,
and willingness to listen
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Made recommendations for PSAA and identified messages for the wider
local audit system to consider
Final report and a standalone Executive Summary
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For eligible bodies:
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develop introductory training for new s151 officers and Audit Comm Chairs
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greater involvement to identify issues and suggest solutions
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issue briefing slides in advance to enrich discussions
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clarify role in contract monitoring / management inc. limitations
•
For audit firms:
–
more tailored firm-specific market engagement
–
expand the information provided to reduce uncertainty
•
For wider stakeholders:
–
better understand what information could be shared to promote the
smoother running of the whole local audit system
The report concluded “
Broadly PSAA are already doing what they can within the
limits of the current legislation and procurement rules
”
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Eligible bodies favoured legislation change:
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from a decision to “opt in” to “opt out” (73%)
–
to enable local discretion to enable the Audit Comm to make decision,
rather than Full Council (81%)
–
however wider stakeholders had more mixed views on such changes
•
Most participants were critical of the wider local audit system:
–
widespread agreement that the current local audit system is ‘broken’ and
needs radical reform
•
The issues that most concerned participants were:
–
market capacity and capability, especially Key Audit Partners
–
delays in signing off audits and the impact of the backlog on future audits
–
standards, regulations, and the role of local government accounts
–
fragmentation of key roles between different entities, including PSAA
TR commented “
PSAA are well aware of these issues, as evidenced in their
press release dated 10th October 2023:
”
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we are required in law to ‘monitor compliance by a local auditor against the
contractual obligations in an audit contract’
•
we are committed to ensuring that our contracted audit firms deliver to the
contract, their method statements, the terms of appointment and the
statement of responsibilities
•
some significant contractual differences from 2023/24 (AP2) to AP1
–
payment milestones **
–
KPIs **
–
review process to ensure method statements remain current
–
rectification plan procedure
•
continue to ground our approach in International Auditing and Assurance
Standards Board’s (IAASB) Framework for Audit Quality:
–
adherence to professional standards and guidance
–
compliance with contractual requirements
–
relationship management (between auditors and audited bodies)
•
continue to publish quarterly and annual reports
** likely to require amendment to reflect backlog solution
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Sections:
1.
adherence to professional standards and guidance
(similar content)
2.
compliance with contractual requirements
(to reflect new contracts)
3.
relationship management
(opportunity to revise our approach)
Section 2: compliance with contractual requirements
Audit delivery: opinions published, specific powers and duties of auditor, objections
Compliance: insurances, information assurance, and modern slavery statement
Method Statement Delivery: quality assurance and capability, resourcing/capacity,
communications and social value
Key Performance Indicators
Key financial statistics such as payment milestones and fee variations
Use of the Review Procedure
Adhoc notifications & requests: independence issues, non-audit services, extensions
and data confidentiality etc
Notifiable defaults
Complaints
Will form the basis for incremental quarterly reporting
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Section 3: relationship management
Keen to hear your views – initial thoughts today, then share with your Societies:
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currently, we issue an annual survey that is the same for all auditors
•
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pportunity to rethink given new contracts and backstop dates
Timing:
retain as annual, or move to within 2 months of opinion delivery or VFM
commentary delivery?
Coverage:
all audited bodies every year or less frequently or random selection?
Method:
retain standard survey or survey with some auditor-specific tailoring,
focus groups, combination?
Other suggestions and ideas:
???
For audits up to 2022/23, we will issue a client survey
following the proposed
backstop date (30 Sept 2024), as most bodies will have received one or more
opinions. Our aim is to capture views and experiences of the “Reset” phase.
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The PSAA underwent an independent review of its preparations for the second appointing period, conducted by Touchstone Renard. The review highlighted effective communication and engagement with stakeholders, with recommendations made for eligible bodies, audit firms, and wider stakeholders to enhance training, involvement, and information sharing practices. The report concluded that PSAA is operating within existing legislation and rules.
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Presentation Transcript
PSAA SDCT Conference 7 March 2024
Agenda New Chair for PSAA Touchstone Renard independent report Independent review of our preparations for the second appointing period Contract Monitoring Reporting from 2023/24
New Chair for PSAA Steve Freer stepping down after 9 years Bill Butler appointed by LGA (IDeA Board) LGA Press Notice Background: Non-executive Director and Chair of Finance and Investment Committee at The Law Society as well as the Non-executive Director and Chair of the Audit and Risk Committee at Gangmaster. Previous roles as an Independent Director of GPDF Ltd; Chief Executive of the UK Security Industry Authority and Director of Corporate Services at the Gambling Commission. Prior to that he was Head of Finance at the Healthcare Commission; and previously worked for the Audit Commission
Independent review of our preparations for the second appointing period Overview Appointed Touchstone Renard in April 2023 to: review, assess and comment on the effectiveness of our external communications and engagement activities provide independent insight informed by external stakeholder feedback on whether we could have adopted different or better approaches to our preparations Overall found that PSAA had communicated and engaged effectively throughout the project: 121 eligible bodies: between 82% and 92% felt PSAA had been very effective or somewhat effective 10 audit firms: most praised PSAA s level of engagement, openness, and willingness to listen Made recommendations for PSAA and identified messages for the wider local audit system to consider Final report and a standalone Executive Summary
Independent review of our preparations for the second appointing period Recommendations for PSAA For eligible bodies: develop introductory training for new s151 officers and Audit Comm Chairs greater involvement to identify issues and suggest solutions issue briefing slides in advance to enrich discussions clarify role in contract monitoring / management inc. limitations For audit firms: more tailored firm-specific market engagement expand the information provided to reduce uncertainty For wider stakeholders: better understand what information could be shared to promote the smoother running of the whole local audit system The report concluded Broadly PSAA are already doing what they can within the limits of the current legislation and procurement rules
Independent review of our preparations for the second appointing period Messages for the wider system Eligible bodies favoured legislation change: from a decision to opt in to opt out (73%) to enable local discretion to enable the Audit Comm to make decision, rather than Full Council (81%) however wider stakeholders had more mixed views on such changes Most participants were critical of the wider local audit system: widespread agreement that the current local audit system is broken and needs radical reform The issues that most concerned participants were: market capacity and capability, especially Key Audit Partners delays in signing off audits and the impact of the backlog on future audits standards, regulations, and the role of local government accounts fragmentation of key roles between different entities, including PSAA TR commented PSAA are well aware of these issues, as evidenced in their press release dated 10th October 2023:
Contract monitoring reporting from 2023/24 Backdrop we are required in law to monitor compliance by a local auditor against the contractual obligations in an audit contract we are committed to ensuring that our contracted audit firms deliver to the contract, their method statements, the terms of appointment and the statement of responsibilities some significant contractual differences from 2023/24 (AP2) to AP1 payment milestones ** KPIs ** review process to ensure method statements remain current rectification plan procedure continue to ground our approach in International Auditing and Assurance Standards Board s (IAASB) Framework for Audit Quality: adherence to professional standards and guidance compliance with contractual requirements relationship management (between auditors and audited bodies) continue to publish quarterly and annual reports ** likely to require amendment to reflect backlog solution
Contract monitoring reporting from 2023/24 Annual reporting (1) Sections: 1. adherence to professional standards and guidance (similar content) 2. compliance with contractual requirements (to reflect new contracts) 3. relationship management (opportunity to revise our approach) Section 2: compliance with contractual requirements Audit delivery: opinions published, specific powers and duties of auditor, objections Compliance: insurances, information assurance, and modern slavery statement Method Statement Delivery: quality assurance and capability, resourcing/capacity, communications and social value Key Performance Indicators Key financial statistics such as payment milestones and fee variations Use of the Review Procedure Adhoc notifications & requests: independence issues, non-audit services, extensions and data confidentiality etc Notifiable defaults Complaints Will form the basis for incremental quarterly reporting
Contract monitoring reporting from 2023/24 Annual reporting (2) Section 3: relationship management Keen to hear your views initial thoughts today, then share with your Societies: currently, we issue an annual survey that is the same for all auditors opportunity to rethink given new contracts and backstop dates Timing: retain as annual, or move to within 2 months of opinion delivery or VFM commentary delivery? Coverage: all audited bodies every year or less frequently or random selection? Method: retain standard survey or survey with some auditor-specific tailoring, focus groups, combination? Other suggestions and ideas: ??? For audits up to 2022/23, we will issue a client survey following the proposed backstop date (30 Sept 2024), as most bodies will have received one or more opinions. Our aim is to capture views and experiences of the Reset phase.
