Audit reform – government abandons plans to consult on reforms

After numerous consultation papers, and despite being included in the King’s Speech in July 2024, the government has confirmed in a letter to the chair of the Business and Trade Committee that it will not be taking forward the majority of the audit and corporate governance reform measures that it had been considering (see our blog post here for further details).

The letter sets out three reasons for the decision, namely the government’s priority to promote economic growth and remove administrative burdens on companies; the progress made since 2018, lessening the need for major reform; and the pressure on parliamentary time given the government’s ambitious legislative plans.

The government does however acknowledge that there still needs to be effective and proportionate regulation of audit and a correctly positioned regulator. Accordingly, the government intends to put the Financial Reporting Council (FRC) on “a proper statutory footing” as soon as parliamentary time allows. No further details were provided but this would likely include giving the FRC improved revenue‑raising powers.