Rishi Sunak has been urged to stop delaying reforms to the UK’s audit regime, with MPs pushing for the plans to be put forward in the King’s speech next week.
A group of MPs and peers have written to the Prime Minister to call on him to include the Audit Reform Bill in King Charles’ state opening of Parliament on Wednesday, November 7.
The cross-party letter, which includes Dame Margaret Hodge; Baroness Helena Kennedy KC; and Lord Iain McNichol among its signatories, highlighted the collapse of Carillion, Patisserie Valerie, Thomas Cook, and Wilko.
Co-ordinated by the Chartered Institute of Internal Auditors (CIIA), it warns: “This long-awaited legislation is vital to restoring trust in audit and corporate governance.
“The need for audit reform is now urgent… more than five years on we are deeply concerned about the pace of reform.”
It comes after the industry watchdog the Financial Reporting Council (FRC) fined accounting firm KPMG a record £21m this month over what it called “textbook errors” in Carillion audits.
A quarter of major audits inspected required improvement in the FRC’s last annual report.
Ministers had pledged to publish a draft audit reform bill in the Queen’s Speech a year ago but it has faced delays.
MPs say legislation is required to give regulators new legal powers and the teeth to hold firms and company directors to account over corporate failures. Under the plans, the FRC is meant to be replaced by a new body, the Audit, Reporting and Governance Authority or ARGA.
Parliamentarians were briefed last week on the need for audit reform including warnings on how corporate failings had led to tens of thousands of job losses; damage to pensions and investments; harm to suppliers; and tarnishing the UK’s reputation as a great place to invest.
Anne Kiem OBE, CIIA chief executive, said: “Despite countless reviews and a White Paper, we are still waiting for Ministers to find the time to pass this much-needed legislation.
“It is vital this Bill is voted on in the next parliamentary session and that the government don’t kick the can down the road until after the election.”
A Department for Business and Trade spokesperson said: “We want the UK to be one of the best places in the world to do business and many reforms have already been carried out at and by the FRC to transform the way it works – including closer supervision of auditors working at the UK’s banks, insurers and listed companies.
“We remain committed to improving audit and corporate governance in the UK and we are also reviewing non-financial reporting requirements to lessen the burdens that businesses currently face.”