Restoring trust in audit and corporate governance

This white paper sets out proposals to strengthen the UK’s framework for major companies and the way they are audited.

Details

This white paper sets out proposals to strengthen the UK’s framework for major companies and the way they are audited. The proposals set out how:

• companies should report on their governance and finances
• reports should be audited
• audit and the audit market should change
• these should be overseen by a new regulator

The objectives of these reforms are to:

• restore public trust in the way that the UK’s largest companies are run and scrutinised
• ensure that the UK’s most significant corporate entities are governed responsibly
• empower investors, creditors, workers, and other stakeholders by giving them access to reliable and meaningful information on a company’s performance
• keep the UK’s legal frameworks for major businesses at the forefront of international best practice

The proposals respond to recommendations made by 3 independent reviews commissioned by the government in 2018:

• Sir John Kingman’s Independent review of the Financial Reporting Council
• the Competition and Market Authority’s statutory audit market study
• Sir Donald Brydon’s independent review of the quality and effectiveness of audit

Respond to the consultation

Please provide your views on these proposals: the consultation closes on 8 July 2021 at 11:45pm.

You can respond to the consultation online.

Documents

Restoring trust in audit and corporate governance

Ref: ISBN 978-1-5286-2401-5, CCS0221978662 03/21, CP 382 PDF, 1.53MB, 232 pages

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Restoring trust in audit and corporate governance

Ref: ISBN 978-1-5286-2401-5, CCS 0221978662 03/21, CP 382 HTML

Order a copy

 

Every few years we go through the motions of "restoring trust", yet somehow or another never manage to achieve that "trust"!

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Big Four To Have Their Wings Clipped - Nothing New Under The Sun!

 

Proposals to reduce the dominance of the "Big Four" accountancy firms and scrap the industry regulator have been unveiled by the government.

The theoretical aim is to improve regulatory standards after high profile corporate failures such as Carillion and BHS.

Also, company directors will face more responsibility to ensure accounts are accurate, or face tougher penalties.

Business Secretary Kwasi Kwarteng said the changes would help restore confidence in business.

There will now be a 16-week consultation on the proposals.

The BBC reports that the business of auditing companies' accounts, and ensuring they are a fair reflection of their financial health, is dominated by four accountancy firms: KPMG, Deloitte, PwC and EY.

However, there is concern that providing both accountancy and auditing services creates a conflict of interest.

Under the new rules, large companies would be required to use smaller auditing firms to conduct part of their annual audit, in an attempt to dilute the Big Four's dominance.

The new proposals would require KPMG, Deloitte, PwC and EY to make their audits more rigorous.

They could face a cap on the number of companies on the FTSE 350 index they may audit, if those improvements don't go far enough.

The government said last year almost a third of audits inspected on the FTSE 350 were in need of improvement.

All of this is rather amusing, given that when I was studying to be an FCA (back in the late 80's) these issues were very much "hot topic" issues at the time.

Seemingly nothing changes, no matter what regulatory shake-ups occur!

Tax Investigation Insurance

Having a Solar Protect Tax Investigation Insurance policy at your disposal means that should you be one of the many 1000's of businesses or individuals that are selected by HMRC each year to look into your tax affairs your own accountant (your tax return agent) can get on and defend you robustly.

You have the peace of mind knowing that your accountant's (your tax return agent) fees will be paid by the insurance without any Excess for you to find.

Tax Investigation Insurance is an insurance policy that will fully reimburse your accountants (your tax return agent) fees up to £100,000 if you are subject to enquiry by or dispute with HMRC.

A Solar Protect policy will enable your Accountant (your tax return agent) to:

• Deal with any correspondence from HMRC
• Attend any meeting with HMRC
• Appeal to the First-tier Tribunal or Upper Tribunal
• Having the security of knowing that fees will be met in full will enable your Accountant (your tax return agent) to defend your position robustly

Please click here for details.