UK Edition
The UK's new, beefed up audit watchdog will not be launched until April 2023 despite Kwasi Kwarteng's pledge to prioritise cleaning up the sector after a string of scandals.
The business secretary has chosen audit reform as a “shovel-ready” project that can help him make an immediate political impact but legal reforms put on the back burner by his department due to Covid-19 and Brexit will not be placed before Parliament until next year, industry sources said.
Politicians and accountants called for the Government to press ahead and implement any changes as soon as possible.
As part of the package, the Financial Reporting Council will be replaced by the Audit, Reporting and Governance Authority, which will be given new powers to clamp down on auditors and directors.
A 2018 report by Sir John Kingman, a former Treasury official, branded the FRC a “ramshackle house” for presiding over low quality audits and a series of accounting scandals.
Michael Izza, chief executive of the ICAEW, a professional body for accountants, said: "We think one of the most important parts of the reform agenda is actually getting this [regulator] up and running as soon as possible.
“We'd really like to see it in 2022 but it's all a question of priorities."
A delayed consultation on the Government's recommendations for reforming the sector is set to run for an extended period of between four and six months, according to industry sources.
It follows three independent reports on the sector, the last of which was published in 2019, and is expected to be published within weeks but the exact timing will be dictated by Downing Street.
David Herbinet, global head of audit at accountant Mazars, said further delay was “not helpful for anyone”.
“Everyone wants to move on with clear foundations and for as long as it's under construction people don't really know what's going to happen,” he said.
Darren Jones, Labour MP and chairman of the business select committee, said the Government should not delay “long-overdue legislation” longer than necessary.
He said: “There is industry-wide consensus on the necessity of reform in many areas and recognition by many that strengthening the reporting framework could help to deliver more robust and reliable financial reporting.”
A Government spokesman said: “The new business secretary has been clear that audit reform is a priority and we will publish comprehensive proposals shortly.”