After the Carillion collapse, the UK will shake up the audit industry

After the Carillion collapse, the UK will shake up the audit industry

The government said the bill will include setting up ARGA, and increase competition through “managed shared audits” for the main listed companies. For companies audited by one of the Big Four, a smaller “challenger” accountant such as Grant Thornton, BDO or Mazars would audit a minority portion of the company to build up experience in blue chip auditing.

On Tuesday, the United Kingdom announced long-awaited plans for a new accounting watchdog to shake up the audit market, four years after the collapse of builder Carillion shattered investor confidence in firm balance sheets. The government announced it would submit draught legislation to restore faith in audit, corporate reporting, and corporate governance by expanding the market for the “Big Four” firms of EY, KPMG, PwC, and Deloitte. Following Carillion’s collapse, three government-backed assessments suggested reforms, including replacing the Financial Reporting Council accounting regulator with a more robust Audit, Reporting, and Governance Authority (ARGA). Before being formally brought to parliament, a draught bill is released for public comment, therefore it is unclear when it will become law.

The Institute of Directors said it was a relief the “long overdue” reform was not completely dropped. The ICAEW, a professional accounting body, said the scope of change signalled a missed opportunity.

“There seems to be no chance that this Bill will pass in the forthcoming Parliamentary session, and very little prospect of it doing so in the one after that,” ICAEW Chief Executive Michael Izza said. In 2020, every company in the FTSE 100 and 91% of the FTSE 250 was audited by one of Big Four. The plan does not go as far as the mandatory joint auditors sought by Britain’s competition watchdog.

“This will improve the quality and usefulness of audit; and boost resilience, competition, and choice in the audit market,” the government said. The bill will also give ARGA “effective powers to enforce director’s financial reporting duties”, meaning a version of the tough U.S. Sarbanes-Oxley Act is now on the table to make top company officials more directly accountable for information given to investors.

The new law would also give ARGA powers to regulate accountancy – currently done to some extent by private professional accounting bodies – and actuaries. It will also reform rules for insolvency practitioners and strengthen corporate governance of firms going bust to tackle asset stripping.

Disclaimer: If you need to edit or update this news from compsmag then kindly contact us Learn more

For Latest News Follow us on Google News


Latest Headlines
  • Show all
  • Trending News
  • Popular By week
Piyush Goyal will represent India at the World Economic Forum in Davos
Piyush Goyal will represent India at the World Economic Forum in Davos
“This event will further strengthen India’s status as a vital and relevant stakeholder in defining the global narrative, especially as India prepares to take ...
Biden starts his Asia trip with a focus on global concerns and technology
Biden starts his Asia trip with a focus on global concerns and technology
The Samsung visit was a nod to one of Biden’s key domestic priorities: increasing the supply of computer chips. A semiconductor shortage last year hurt the ...
Yellen says G7 will give Ukraine funds it needs 'to get through this'
Yellen says G7 will give Ukraine funds it needs ‘to get through this’
The meeting wraps up on Friday. U.S. Treasury Secretary Janet Yellen said the G7 finance leaders on Thursday consented to give Ukraine the financial ...
Canada blacklisted Huawei and ZTE over security concerns
Canada blacklisted Huawei and ZTE over security concerns
The report continues to state that Canada has “delayed the decision,” in an effort to avoid provoking or “stoking tensions” between Canada and China. ...
T-Mobile and Metro can now give you a Moto G 5G for free (or very cheap) (2022)
T-Mobile and Metro can now give you a Moto G 5G for free (or very cheap) (2022)
Formally unveiled roughly a month ago alongside its pen-wielding cousin, the Moto G 5G (2022) only went on sale stateside yesterday, fetching the ...
'Fortnite' is now available on iOS Safari and Android via GeForce NOW
‘Fortnite’ is now available on iOS Safari and Android via GeForce NOW
The closed beta gave the GeForce NOW team the opportunity to test and learn, which resulted in optimized on-screen touch controls and game menus, with ...
As Tether, Luna and Terra crumble, the crypto system faces regulation
As Tether, Luna and Terra crumble, the crypto system faces regulation
In simple terms, TerraUSD’s one-to-one peg with the US dollar was maintained by an arbitrage with its sister coin, Luna. The coins are interchangeable, with ...
Borderlands 3 is the first free PC game available as part of Epic Games’ Mega Sale
Borderlands 3 is the first free PC game available as part of Epic Games’ Mega Sale
Borderlands 3 was first released in 2019 on PlayStation 4, Windows PC (initially exclusively through the Epic Games Store), and Xbox One. Since its release, ...
The First RISC-V Laptop Might Be Here Sooner Than You Think
The First RISC-V Laptop Might Be Here Sooner Than You Think
“The big question everybody is asking themselves… we will see the first RISC-V laptop announced this year,” he said. “There’s a mystery laptop pictured on ...
Thunderous is currently working on four new SteamWorld games
Thunderous is currently working on four new SteamWorld games
Thunderful has said that it plans to release as many SteamWorld games in next two years as it has in the last nine. The webcast, which will start at noon ...
Show next
We will be happy to hear your thoughts

Leave a reply

Compsmag - Latest News In Tech and Business
Logo