The Labour Party has said it will pass long-awaited legislation on audit and corporate governance reforms if it wins the next general election.
Shadow business secretary Jonathan Reynolds told the Financial Times his party would deliver the required legislation to put a new, beefed-up regulator, known as the Audit, Reporting and Governance Authority (ARGA), into place and grant it statutory powers.
Reynolds said: “We feel that this government has not just delayed it, we think it’s dead. We think it’s not coming.
“We would replace the Financial Reporting Council (FRC) with the new proposed ARGA, which will be the new body with teeth at the heart of this.
“I cannot see an argument for it not progressing.”
It comes after a series of high-profile corporate collapses, such as cake firm Patisserie Valerie and outsourcer Carillion, where there company’s auditors were heavily criticised for failing to spot the warning signs sooner.
A report by Sir John Kingman recommended five years ago that the FRC be replaced with a regulator with tougher powers.
But government legislation to deliver the ARGA has been repeatedly delayed.
The Financial Times reported last month that the audit reform plans will not be in the King’s Speech in November, which sets out the parliamentary agenda for lawmaking over the next year.
Reynolds said reform was a “priority” and “part of our commitments” for Labour but could not guarantee that it would be in the first King’s Speech, if it won the next election.
The government spokesperson told the paper that ministers remained “committed to improving audit and corporate governance” and that legislation would be introduced “when parliamentary time allows”.
“Reform is already under way – the FRC 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,” the spokesperson said.