Business Leaders Condemn Government's U-Turn on Audit Reform
Senior City figures have launched a stinging rebuke of the government's decision to abandon the Audit Reform and Corporate Governance Bill, with the heads of the Institute of Directors (IoD) and the Chartered Institute of Internal Auditors leading the criticism.
In a strongly-worded open letter to Business Secretary Peter Kyle, eleven industry leaders, campaigners, and academics described the move as "a significant step backwards", particularly following commitments made in the King's Speech to publish draft legislation.
Scrapping Proposed Regulatory Overhaul
The Department for Business and Trade revealed on Tuesday that the government would scrap the Audit Bill to "avoid significant new costs to firms", burying the announcement within a detailed press release.
The proposed legislation, which had been previously shelved by the Conservative government in November 2023 to focus on growth and competitiveness, was revived when Labour assumed power. The plans aimed to fundamentally reform audit and corporate governance by replacing the Financial Reporting Council (FRC) with a new, more robust regulator called the Audit, Reporting and Governance Authority (ARGA).
Industry Leaders Voice Disappointment
Signatories to the letter include Jonathan Geldart, Director General of the IoD, Anne Kiem OBE, Chief Executive of the Chartered Institute of Internal Auditors, and Catherine Howarth, Chief Executive of ShareAction.
The letter states: "If the government is serious about driving growth and delivering economic stability, it must act to prevent further avoidable failures through stronger oversight of our largest companies."
Instead of proceeding with the new regulatory framework, the government has indicated it will prioritise the existing FRC. The business leaders urged the government to "publish the proposals for a modernised corporate reporting framework without delay, and make it a clear priority to deliver the strengthened audit regulator."
Separate Criticism from Audit Experts
In a separate development, Dean Beale, Executive Director of the Centre for Public Interest Audit, has written an independent letter to the government expressing profound disappointment at the decision to drop the Bill.
This coordinated criticism highlights growing concern within the business community that the government's U-turn represents a missed opportunity to enhance corporate transparency and accountability, potentially undermining efforts to strengthen the UK's economic governance framework.
