News / Incoming IFRS leads to fees uplift

Most NHS bodies will see a 6% increase in audit fees in 2009/10 following the introduction of international financial reporting standards (IFRS).

Announcing its work programme and scale of fees for the new financial year, the Audit Commission said the increase reflected the cost of the additional work needed to prepare accounts in accordance with 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.

NHS bodies with private finance initiative (PFI) schemes could have to pay more as the 6% increase did not include provision for reviewing the accounting treatment of these schemes, which may be required as a result of moving to IFRS.

The commission has specified additional work in accordance with the Code of audit practice. This includes auditors’ input into the new Comprehensive Area Assessment – the audit work leading to the delivery of use of resources assessments for primary care trusts – and the use of the updated Auditors’ Local Evaluation for non-foundation trusts. The commission will also continue its rolling programme of clinical coding audits to ensure PCTs make the correct payments under payment by results.

To help NHS bodies’ financial planning, the commission outlined factors that would influence its fees in 2010/11. These were a net 1.25% increase for inflation (after allowing for 3% efficiency savings) and a net 2% reduction to reflect the fall in the ongoing audit costs arising from the transition to IFRS.

It envisaged that fees in 2011/12 would rise by 2%.