Audit reform looks like it could finally take a step forward after being included in the King’s Speech.
A long-waited commitment to audit and corporate governance reforms has been included in the King’s Speech.
More than 35 bills and draft bills are being introduced in a bid to “enable economic growth”, says Labour, with the focus being on accelerating the building of houses and infrastructure, improving transport, creating more jobs and securing clean, green energy.
New laws are also being designed to hand power back to local leaders.
Different story
At the last King’s Speech in November, the omission of audit reform was met with disappointment from across the accounting profession. However, it’s a different story today.
“Stability will be the cornerstone of my government’s economic policy and every decision will be consistent with its fiscal rules,” said King Charles among his first points. “It will legislate to ensure that all significant tax and spending changes are subject to an independent assessment by the Office for Budget Responsibility (Budget Responsibility Bill).
“Bills will be brought forward to strengthen audit and corporate governance, alongside pension investment (Draft Audit Reform and Corporate Governance Bill, Pension Schemes Bill).”
Crucial part of the reforms
Alan Vallance, Institute of Chartered Accountants in England and Wales (ICAEW) chief executive, expressed delight that more than six years on from the collapse of Carillion, the legislation has been backed as a priority.
“Reliable, trusted reporting by companies is fundamental to investor confidence, which in turn is key to economic growth and stability,” he said. “This long-awaited reform will not only reduce the risk of disorderly business failure, but will contribute to the transition to net zero.
“Establishing the new statutory regulator – the Audit, Reporting and Governance Authority (ARGA) – and providing it with powers to take effective enforcement action against directors of UK public interest entities, is a crucial part of these reforms.
“We look forward to seeing a package of measures which, taken together, will make Britain the best place in the world to invest and to start, run and grow a business.”
Severely overdue
Gavin Hayes, head of policy and public affairs at the Chartered Institute of Internal Auditors, added: “We are delighted that the government has committed to a draft Audit Reform and Corporate Governance Bill in the King’s Speech.
“Ensuring the audit regulator has the legal powers it needs to do its job effectively is vital to restore trust in the audit and corporate governance system which underpins our economic stability.”
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Mike Suffield, director of policy and insight at the Association of Chartered Certified Accountants (ACCA), said audit reform has been “severely overdue in the UK, yet repeated delays have sidelined it, despite the importance of it in promoting the UK as a great place to do business”.
“ACCA has long called for this implementation, so to see it included in the King’s Speech as one of the first points of the speech is a huge step forward.
“Legislation will place the planned new regulator, the ARGA, on a statutory footing and will set out clear expectations and accountability for boards, management and auditors.
“The shift of the Financial Reporting Council to ARGA as a clear independent watchdog will strengthen the oversight of audit quality so that audit firms can be held properly to account, introducing changes that have been needed since the collapse of Carillion in 2018.”
by
Accountancy Daily(Edited)