U.K. delays audit reforms even as regulator piles on financial pressure

Further delays to the U.K.’s long-promised Audit Reform and Corporate Governance Bill and the creation of a new regulator, known as the ARGA, have triggered a slew of criticisms and calls for a timetable for reform. On Sept 8, 66 MPs from across all political parties sent a letter to the Prime Minister, coordinated by the Chartered Institute of Internal Auditors, calling for reforms to be brought back onto the Parliamentary agenda. They said the “case for reform is now more pressing than ever.” 

It’s clear that the wider audit reform debate is not going away. There is a political and societal consensus that good audit practices are there to protect investors and stakeholders, and the U.K. government’s pursuit of growth is likely to increase pressure for trust and increased investment. Whether (or when) the ARGA comes into being, the pressure for corporate financial transparency is set to increase. Compliance should therefore see audit both as a regulatory and a reputational risk and, conversely, as a potential strength.

The decision to delay the promised reforms was announced in a July 21 letter from Justin Madders, Parliamentary Under-Secretary of State at the Department for Business and Trade, to the Business and Trade Committee. In the letter, Madders attributed the delays to “the current volume of legislation before Parliament.”