UKs audit regime to be revamped
The government has announced plans to revamp the UK’s corporate reporting and audit regime.
The main changes were summarised as follows in a joint press release published by the Department for Business, Energy & Industrial Strategy, Department for Levelling Up, Housing and Communities, and the Minister for Corporate Responsibility.
- government will tackle dominance of ‘Big Four’ audit firms and create a new regulator to reduce the risk of sudden big company collapses, safeguard jobs and reinforce the UK’s reputation as a world-leading destination for investment
- reform is already underway, with the Business Secretary acting today to enable the regulator to ban failing auditors from reviewing large companies’ accounts
- government commits to review corporate reporting burdens on businesses to maximise the benefits of Brexit and reduce burdens
The reforms are intended to improve the audit regime and corporate transparency will help prevent sudden large-scale collapses like Carillion and BHS, which affected countless small businesses and led to job losses.
The Financial Reporting Council (FRC) will be replaced by a new, stronger regulator – the Audit, Reporting and Governance Authority (ARGA). This is expected to start from April 2023. Large private companies will also come under the scope of the regulator for the first time.