Reforms to the audit sector outlined by the Department for Business, Energy and Industrial Strategy (BEIS) are expected in the new year, with full implementation expected in 2023.
Mazars head of audit Bob Neate told industry magazine Accountancy Age he expected BEIS to deliver around 110 recommendations drawn from three major reports into auditing.
The audit boss told Accountancy Age that among the proposals would be information on the Audit, Reporting and Governance Authority (ARGA) replacing the current audit regulator, the Financial Reporting Council (FRC).
Neate said the proposals would likely come in to play in 2023. He explained: “The intention we hear is to try and move to legislation for some of the main elements of it at the end of 2021. So, it is likely implementation will be in 2023. That will cover things like the creation of the new regulator.”
A BEIS spokesperson said: “Strengthening our corporate governance and audit regime will help to ensure that the UK remains a world leader in corporate transparency and advances its status as a place of the highest standards in audit.
“The government will respond with comprehensive proposals for audit reform and will then bring forward legislation as soon as parliamentary time allows.”
The FRC has been approached for comment on the rumours.
The FRC will eventually transition into ARGA, and is currently processing reforms to audit that can be implemented ahead of legislation.
In late 2018 the Kingman report recommended the FRC be replaced with ARGA. The report painted a damning picture of the FRC. It described the watchdog as “an institution constructed in a different era – a rather ramshackle house, cobbled together with all sorts of extensions over time” and “almost powerless” to address firm-wide issues of audit quality.