Fresh calls for government action on audit reform

The Chartered Institute of Internal Auditors has urged the government to move forward with plans to revamp the audit industry. In letters to the new Prime Minister Rishi Sunak, Business Secretary Grant Shapps and Chancellor of the Exchequer Jeremy Hunt, the Chartered IIA said the government needs to provide a “clear schedule” for its intentions to reform the country’s audit industry to secure long-term economic resilience and stability.

Earlier this year, the government committed to publishing a draft Audit Reform Bill in the Queen’s speech. However, a clear timetable for when this will happen has yet to be communicated by the Department of Business, Energy and Industrial Strategy. The Bill aims to rebuild trust in the UK’s audit, corporate reporting and corporate governance system, reinforcing the UK’s reputation as a leading destination for investment, as well as protecting the country’s professional services sector. The Chartered IIA points out that greater transparency would give investors clarity and assurance and aid the financial robustness of businesses, supporting the new Government’s focus on delivering economic stability and resilience.

The Queen’s Speech also revealed the government will be moving forward with the creation of a new regulator, ARGA (the Audit, Reporting and Governance Authority) as well as making it a statutory requirement for the UK’s biggest firms to publish an Audit and Assurance Policy and Resilience Statement. The lack of a clear timetable for when these proposals will be put into place is worrying, says the Chartered IIA, which is also concerned that proposals that would strengthen internal controls have been shifted to the UK’s Corporate Governance Code instead of being tabled for legislative action.

John Wood, chief executive of the Chartered IIA, said: “To maintain Britain’s position as a global leader in first-class corporate governance and to deliver greater economic resilience, the new government must get on with audit reform. The new Business Secretary must publish the draft Audit Reform Bill without delay, along with the statutory instruments needed to make audit and assurance policies and resilience statements a new requirement.”

Both Darren Jones MP and Baroness Natalie Bennett have tabled questions in the House of Commons and House of Lords respectively regarding the status of the draft Audit Reform Bill. Baroness Bennett has asked the government to detail what progress has been made and what resource allocation has been put towards the draft of the Bill, while Darren Jones MP has asked if the Business Secretary will bring forward legislative proposals on audit reform.

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