The Institute of Chartered Accountants of Scotland (ICAS) has voiced strong dissatisfaction over the UK Government’s move to drop the Audit and Corporate Governance Reform Bill.

ICAS CEO Gail Boag, in an emailed statement to the Accountant Online, described the decision as “deeply frustrating”, stressing that the profession and policymakers have long agreed that the current regulatory framework needs significant reform.

“There was recognition that better corporate governance could not only support investor confidence and therefore business growth but also that more must be done to protect the wider impacts of corporate collapse on the public,” Boag said.

She pointed to the failures of Carillion, BHS and Patisserie Valerie as examples of why legislative change is needed, noting that these cases led to substantial job losses and pension impacts, underlining the consequences of weak governance.

Boag said there had been progress in recent years, including work by the Financial Reporting Council (FRC) but that core issues remain unresolved.

“There is no doubt that recent improvements and work across the sector and by the FRC have moved us on from where we were, and that the quality of audit and of corporate governance has improved.

“However, the issue of director accountability remains far from resolved, and there is an urgent need to clarify the scope of the FRC’s role and powers.

“Through our advocacy and regulatory work, we will continue our efforts to increase business confidence and growth, whilst also protecting consumers and the public,” Boag added.

The government has said it decided to abandon the bill because the package of measures would be too expensive for large companies to implement.

The legislation had been expected to revise the definition of public interest entities, strengthen directors’ accountability for existing reporting duties and create a new regulator with expanded powers.

The Institute of Chartered Accountants in England and Wales has also criticised the move.

Its CEO, Alan Vallance, said: “We cannot hide our disappointment that after many false dawns, the government has decided to scrap the Audit and Corporate Governance Bill.

“The government had itself recognised that an Audit Reform Bill would increase global investor confidence in UK companies and increase the prospects of growth,” Vallance added.