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June 4, 2022

FRC welcomes Government plans to bring forward audit and corporate governance reforms

By Zoya Malik

The Financial Reporting Council (FRC) welcomes the Government’s response to its consultation ‘Restoring trust in audit and corporate governance’ which sets out the next steps to reform the UK’s audit and corporate governance framework

Long awaited reforms are a once in a generation opportunity to ensure corporate Britain upholds the highest standards of governance and protects those stakeholders who rely on high-quality reporting.

Legislation is required to ensure the new regulator – the Audit, Reporting and Governance Authority (ARGA) – has the powers it needs to hold to account those responsible for delivering improved standards of reporting and governance.  

The FRC’s CEO, Sir Jon Thompson said, “The FRC welcomes the Government’s response and its commitment to deliver much needed reform.

It was pleasing to see during the consultation process overwhelming stakeholder support for the creation of ARGA with strengthened powers to ensure investors, employees, pensioners and suppliers are better protected against the consequences of corporate failure.

The Government’s decision not to pursue the introduction of a version of the Sarbanes-Oxley reporting regime is, the FRC believes a missed opportunity, to improve internal controls in a proportionate, UK-specific manner. We know that well-run companies contribute to a stronger, healthier economy overall.

While we await the final piece of the legislative jigsaw, the FRC will continue to do all in our power to ensure that audit and corporate reporting standards remain high to ensure better outcomes for stakeholders”

Ahead of Government legislation, the FRC will shortly be outlining an extensive work plan to advance reforms which can be developed through existing powers or on a voluntary basis.

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