The UK’s accounting watchdog has pledged to put in place a series of new measures to raise standards in the UK audit industry to pave the way for the government’s long-awaited reforms British.
The UK’s Financial Reporting Council (FRC) released a document on Tuesday outlining its plans to review existing codes, strengthen standards and overhaul the UK’s Corporate Governance Code, in line with UK government plans. for the reform of the audit sector.
The FRC’s plans include seeing the watchdog strengthen its sustainability reporting requirements and tighten rules for business leaders on signing company accounts. The watchdog also said it planned to “simplify” reporting requirements, while ensuring standards remained high.
The paper aims to clarify the government’s long-awaited overhaul of the audit industry in the UK, with a view to outlining the FRC’s plans to lay the foundations for reform of the audit industry, as the government puts put in place more ambitious legislative measures. .
FRC chief executive Sir Jon Thompson said: “These long-awaited reforms are a unique opportunity to ensure that UK companies uphold the highest standards of governance and protect stakeholders who rely on reports. High quality.”
“Pending government legislation, the FRC is pursuing these changes to standards and codes which will improve and strengthen the UK’s auditing and corporate governance framework and lay the foundation for the establishment of ARGA.”
The FRC’s proposals come after the UK government announced plans to shake up the country’s audit industry, to restore confidence in UK businesses, following a series of major accounting scandals involving some of the most large companies in the UK.
Plans include the government replacing the FRC with a new, more powerful regulator – dubbed the Audit, Reporting and Governance Authority (ARGA) – and forcing the Big Four accounting firms to share audits of large listed companies with challengers. smaller. businesses.
Selina Sagayam, a partner at Gibson Dunn, said the FRC’s proposals are “largely in line” with the government’s plans to reform the audit industry. Sagayam said plans to put in place a clear framework around sustainability reporting are likely to be a “welcome” development, in the face of increasing scrutiny of “greenwashing cases”.
The law firm’s partner said the FRC’s plans to “simplify” reporting requirements are also likely to be welcomed by companies and stakeholders, as she claimed that those subject to reporting requirements “are tired of the ever-increasing weight of the compliance burden”. with new reporting rules.