Experts slam government’s Audit sector reform plans

Experts have blasted the Government’s audit industry reform plans as a ‘missed opportunity’.

Industry bosses complained that Prince Charles made no mention of the shake-up when he read out the Queen’s Speech to Parliament yesterday – implying it was low down on Boris Johnson’s agenda.

And the reference to audit reform in the Government’s background notes was brief and narrow, they added.

Investors, company directors and auditors themselves were hoping ministers would use the Queen’s Speech to kick off a ‘root-and-branch’ overhaul of the troubled audit sector.

The industry has been brought into disrepute by auditors’ failure to spot impending scandals such as the collapse of Carillion and Patisserie Valerie.

But the Institute of Chartered Accountants in England and Wales (ICAEW) said the reforms neglected broader concerns about auditors’ roles, and how central they should be in helping to uncover such disasters.

‘The mention of audit reform in this Queen’s Speech is doubly disappointing,’ ICAEW chief executive Michael Izza said.

‘First, the proposed scope of change is modest, and in particular it constitutes a missed opportunity to address wider issues in corporate governance.

‘But the second disappointment is more serious – timing. There seems to be no chance that this Bill will pass in the forthcoming Parliamentary session.’

In its background notes, the Government said its draft Audit Reform Bill would establish a new, more aggressive regulator for the industry to replace the Financial Reporting Council.

More of the UK’s largest companies will also be classed as ‘public interest entities’, meaning their audits would be subject to more stringent oversight.