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November 4, 2022

Chartered IIA urges UK Govt to bring in audit reform

By Santiago Bedoya Pardo

The UK’s Chartered Institute of Internal Auditors (Chartered IIA) has urged the government to move forward with its plans to reform the audit industry. The Chartered IIA has been joined in its calls by Baroness Natalie Bennet and Business, Energy, and Industrial Strategy (BEIS) committee chairman Darren Jones MP.

Bennett and Jones have both tabled a series of questions directed at the government regarding its commitment to introduce audit reform in the UK. Business secretary Grant Shapps has been asked to offer information regarding whether there has been any progress with the draft Audit Reform Bill, a reform package the government committed to publish in the Queen’s Speech earlier this year.

While the Johnson government declared its commitment to the Bill earlier this year, a clear timetable for its publishing is yet to be issued by BEIS. The Bill’s aims revolve around rebuilding trust in the UK’s audit, corporate reporting, and corporate governance system. The goal behind the Bill is to reinforce the UK’s reputation as a world-leading destination for investment, while also offering protection its world-class professional services sector. It is also expected to offer a greater degree of transparency to investors, aiding the financial robustness of the sector. These aims would be supportive of the Sunak government’s focus on delivering both economic stability and resilience.

As part of this effort, the Chartered IIA has issued a series of letters to PM Rishi SunaK, Business Secretary Grant Shapps, and Chancellor of the Exchequer Jeremy Hunt. In these letters, Chartered IIA chief executive John Wood 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 statutory instruments needed to make Audit and Assurance Policies and Resilience Statements a new requirement.”

The Queen’s Speech earlier this year further revealed the government’s intent to move forward with establishment of a new regulator, the Audit, Reporting, and Governance Authority (ARGA), while further making it a statutory requirement for the UK’s biggest firms to publish an Audit and Assurance Policy and Resilience Statement. The Chartered IIA has characterised the absence of a clear timeline for the Bill’s introduction as “concerning”, for the proposals that would strengthen internal controls have been shifted to the UK’s Corporate Governance Code instead of being tabled for legislative action.

On the legislative front, both Baroness Bennett and Jones have tabled questions in the House of Lords and the House of Commons respectively regarding the current status of the Bill.

For more on the Sunak government.

For more on the Chartered IIA.

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