New audit regulator

Audit and governance reforms will deliver a new regulator

The Government has announced reforms of company audits and corporate governance that will see the creation of a more powerful watchdog. The Audit Reform and Corporate Governance Bill unveiled in the King’s Speech will pave the way for the Audit, Reporting and Governance Authority (ARGA) to replace the Financial Reporting Council (FRC). The Bill will look to ensure more robust and rigorous scrutiny of large companies by auditors and will also see all directors of large companies face sanctions if they fail in their financial reporting duties. King Charles said the reforms will “strengthen audit and corporate governance.” FRC chief executive Richard Moriarty welcomed the draft legislation, saying there are “serious gaps in the regulatory toolkit.” He added that the reform plans build on the FRC’s “transformation in recent years into a more robust and effective regulator and its remit to support the UK’s economic growth and international competitiveness.” Alan Vallance, chief executive of the ICAEW, commented: “Establishing the new statutory regulator – the ARGA – and providing it with powers to take effective enforcement action against directors of UK public interest entities, is a crucial part of these reforms.” Gavin Hayes, head of policy and public affairs at the CIIA, added: “Ensuring the audit regulator has the legal powers it needs to do its job effectively is vital to restore trust in the audit and corporate governance system.”