Ministers are reportedly set to shelve a planned overhaul of the UK’s audit and governance regime due to concerns the government won’t have enough time to pass the changes in parliament.
The government has pledged major reform of the audit regime after a series of high-profile accounting scandals, including the collapse of construction giant Carillion in 2018, which happened after auditors signed off its books.
Legislation was due to be brought forward this autumn in the King’s Speech, where government lays out its priorities for the next session of parliament, but the plans are now set to be kicked back, the Financial Times reported today.
A government insider told the Financial Times that “wholesale reform” was unlikely but there are “some measures we can take using secondary legislation to implement some of the reforms.”
“We are still keen to do it — the government isn’t backing off — but it’s the usual question of parliamentary time,” the source said.
A government spokesperson told City A.M. that ministers remain “committed to improving audit and corporate governance in the UK”.
“Reform is already underway – the Financial Reporting Council has transformed the way it works, is consulting on changes to the Corporate Governance Code, and now has more powers to ban inadequate auditors from reviewing large companies’ accounts,” they added.
Under the planned shake-up, the accounting watchdog the Financial Reporting Council would be replaced with a more powerful regulator called the Audit, Reporting and Governance Authority, or ARGA.
Some 600 private firms would also be classed as “public interest entities”, resulting in tighter regulation under the plans.