Audit reforms left out of King’s speech

Summary

The King's speech today included 21 pieces of legislation that are set to shape the prime minister’s pre-election plans, but what wasn’t prioritised was the audit and corporate governance reform bill. This omission has been met with disappointment from across the accounting profession, as the government has only committed to bringing forward the legislation when “parliamentary time allows”, with no timetable in place. This means the momentum is taken out of key proposals such as the new enhanced Audit, Reporting and Governance Authority (ARGA) regulator. The Financial Reporting Council (FRC) will still utilise its current regulatory toolkit to support UK businesses, but it will only take forward a small “focused number of proposals” out of the 18 it set out in its consultation. This includes strengthening corporate governance outcomes, improving internal controls and reducing reporting burden and duplication. Professional bodies are urging the government to reconsider its decision, as the lack of action risks undermining public trust in corporate transparency, governance, reporting and audit in the UK.

Q&As

AI Comments

👍 This article provides a comprehensive overview of the audit reform debate and its implications for the UK economy. It's clear that the government is committed to restoring trust in the audit regime and ensuring that the UK sets a global standard.

👎 The King's speech has failed to prioritize audit reform, which means that any efforts to reform the audit process have been put on hold until after the next general election. This lack of action could potentially undermine public trust in the corporate sector.

AI Discussion

Me: It’s about the omission of audit reform from the King's speech. It pushes any efforts to reform the audit until after the next general election.

Friend: That's not good. What are the implications of this?

Me: Well, the government's lack of action on this issue could potentially undermine public trust in the business community and the economy as a whole. It could also lead to more corporate collapses if the reforms aren't implemented soon. There's also the concern that the government is not prioritising audit reform and that it's taking a backseat to other legislative priorities.

Action items

• Research the proposed audit reforms and the role of the ARGA regulator.
• Reach out to stakeholders to discuss the implications of the government’s decision to omit audit reform from the King’s speech.
• Develop a plan to ensure that your audit process is up to date and compliant with the latest regulations.

Technical terms

Audit

A systematic examination of an organization's financial records and accounts to ensure accuracy and compliance with applicable laws and regulations.

ARGA

The Audit, Reporting and Governance Authority, a proposed new regulator for the audit profession in the UK.

FRC

The Financial Reporting Council, the UK's independent regulator responsible for promoting high quality corporate governance and reporting to foster investment.

Sarbanes-Oxley

A US law passed in 2002 that requires public companies to maintain accurate financial records and report any discrepancies to the Securities and Exchange Commission.

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