• Register
Return to: Home > News > UK’s BEIS shows support for Sarbanes-Oxley-inspired regime

UK’s BEIS shows support for Sarbanes-Oxley-inspired regime

In the UK’s Business, Energy and Industrial Strategy select committees’ (BEIS) Future of Audit report, MPs have shown support for stricter regulation of the audit market and an openness towards a UK Sarbanes-Oxley Act-styled regulation.

The Future of Audit report said it welcomes the UK Government’s commitment to consult on the possible introduction of a strengthened framework around internal controls on a similar basis to Sarbanes-Oxley.

It said: “If adapted to the UK regulatory system, a UK equivalent could make a significant contribution to improving the reliability of financial reporting.”

The report noted there was support from a range of stakeholders for the introduction of a UK Sarbanes-Oxley regime, who argued that by placing more responsibility on CEOs and CFOs, it would improve the overall reliability of the eco-reporting system.

It also noted counter arguments to introducing a Sarbanes-Oxley regime in the UK could make management resistant to disclosing weaknesses and mistakes for fear of being sued in the future, and that it might stifle innovation in financial reporting.

The Kingman review said that if a Sarbanes-Oxley system was introduced it could: “Impose significant costs, at least initially, particularly on smaller listed companies. The US experience shows that smaller companies are affected disproportionately and listing could become less attractive. Ongoing, recurring costs, however, are said to be lower.”

However, overall the report said if a UK Sarbanes-Oxley system was ‘introduced carefully and monitored to avoid these unintended consequences, it could contribute to a more robust financial reporting system’.

The report, which is one many that have recently focussed on the UK audit market, also called for a structural breakup of the Big Four, legally dividing audit and non-audit service lines into two distinct entities, building on the Competition and Markets Authority proposal to introduce an organisational split.

Top Content

    ARGA team, assemble!

    The new top team has been named that will see in root-and-branch reform at the Financial Reporting Council (FRC) as it transforms into the Audit, Reporting and Governance Authority (ARGA). Will the new duo be as dynamic as some are hoping? Robin Amlôt reports.

    read more

    FASB: a quest for simpler standards

    FASB chair Russell Golden addressed the IMA 2019 Annual Conference and Expo at the Sheraton San Diego Hotel and Marina, California, on 18 June. IMA immediate former chair-emeritus Alex Eng acted as moderator. Joe Pickard reports.

    read more

    The future of audit, and how to get there

    Two recent reports peer into the future of the audit profession. One analyses what an audit should offer, while the other looks at how the audit process will be carried out. Robin Amlôt takes a closer look at both.

    read more

    EFAA elects new president, focuses on digital future

    EFAA’s new president, Salvador Marin, outlined his key priorities for the next two years at the organisation’s 2019 annual general meeting, while outgoing president Bodo Richardt offered advice. Robin Amlôt reports.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.