Business Secretary aiming to launch major overhaul of UK’s audit regime

Business Secretary Kwasi Kwarteng has announced major new reforms to the UK's audit regime, aiming to safeguard future British jobs and avoid company failures.

The proposed reforms aim to avoid a repeat of several high profile company collapses, such as Arcadia, BHS and Debenhams, breaking up the dominance of the “big four” audit firms to improve the quality of corporate reporting on long-term success of large companies in all sectors.

As part of the Government proposals to improve the audit market, it has been suggested:

• Large companies would be required to use a smaller firm to conduct a meaningful portion of their annual audit.
• The introduction of a new regulator, the Audit, Reporting and Governance Authority (ARGA), which could oversee the largest unlisted companies as well as those on the stock market.

To reinforce investor and public confidence in audit, it has been suggested:

• New reporting obligations would be introduced on auditors and directors to detect and prevent fraud.
• Audits will also be able to extend beyond a company's financial results to look at their wider performance to ensure investors and other interested parties are fully informed.
• The new regulator (AGRA) would be backed by legislation, funded by a mandatory levy on industry, and given much stronger powers to enforce standards.

Business Secretary Kwasi Kwarteng said: "Restoring business confidence, but also people's confidence in business, is crucial to repairing our economy and building back better from the pandemic.

"When big companies go bust, the effects are felt far and wide with job losses and the British taxpayer picking up the tab. It's clear from large-scale collapses like Thomas Cook, Carillion and BHS that Britain's audit regime needs to be modernised with a package of sensible, proportionate reforms.

"By restoring trust in our corporate governance regime and encouraging greater transparency, we will provide investors with clarity and certainty, cement the UK's position as the best place in the world to do business, and protect jobs across the country."