UK drops audit reform legislation
The UK Government has confirmed it will not proceed with the long-anticipated Audit Reform and Corporate Governance Bill, drawing a line under nearly a decade of debate on the future of audit oversight and corporate accountability.
Originally prompted by high-profile corporate failures such as Carillion and BHS, the proposal would have delivered the most significant overhaul of the UK audit regime in decades. Central to the reforms was the replacement of the Financial Reporting Council (FRC) with a new statutory regulator, the Audit, Reporting and Governance Authority (ARGA), equipped with sharper teeth and stronger enforcement powers. The original bill also proposed broadening the definition of public interest entities and tightening up director accountability.
Instead, the Department for Business and Trade said it had chosen to avoid imposing additional regulatory burdens on companies, and, instead, focus on freeing up companies for growth and competitiveness. Ministers argued that reforms already implemented by the FRC through non-legislative measures have strengthened supervision, revised audit quality standards and expanded enforcement, reducing the need for sweeping statutory change.
Reaction has been divided. Professional bodies and investor groups expressed disappointment, warning that the absence of legislation leaves unresolved questions around audit quality, market resilience and director accountability. Others, including some business representatives, welcomed the decision as a pragmatic step.
For now, the FRC will remain the UK’s audit regulator without the statutory footing that ARGA would have provided, although we hear that some legislative change -providing a consistent and clearer mission for the independent agency – is in the works.
We hated the new name anyway…. (Ed — “Arga” is the leading brand of country style wood burning stoves in the UK!) … and remain extremely supportive of the outstanding work that the FRC does in digital reporting research, education, and of course, taxonomy development.
Read the announcement here.
