News / Economic woes spark audit fee cutbacks

The Audit Commission is to cut by 50% its planned rise in audit fees in 2009/10.

In its work programme and scale of fees for 2009/10 announced in December, the commission said fees would rise by 6% to reflect the cost of the additional work needed to prepare accounts in accordance with international financial reporting standards (IFRS). The commission said the transition to IFRS would significantly increase auditors’ work, particularly in the first year when the previous year’s accounts would have to be restated.

However, it has had a change of heart – NHS bodies will receive a one-off rebate in December this year so the net fees increase will now be 3%. The commission said the package, which was worth £3.3m across the public sector, would be funded from reductions in the cost of its operations.

The move was prompted by the worsening economic conditions, said commission chairman Michael O’Higgins (pictured above). ‘All public bodies are feeling the chill. The introduction of the standard does impose an extra cost on them and we wanted to help. We listen carefully to the bodies we audit and appreciate their financial position,’ he said.

‘We have decided that the 3% rebate, which covers the transition costs, is appropriate and timely and thanks to the savings we’ve made, we are in a position to fund it.’

The commission also published the finalised framework for the Comprehensive Area Assessment, which applies to primary care trusts from 1 April. The framework said the organisational assessments published by the Care Quality Commission in 2009 – the annual health check – would assess quality of services, standards and financial management. The quality of financial management assessment will use the PCT score for the managing finances theme in the new use of resources assessment.