By Emma Wilson, Partner
There has been ongoing discussion about the need for audit reform for many years, ever since the Audit, Reporting and Governance Authority (ARGA) was announced in 2019.
While that particular reform looks unlikely to manifest anytime soon, there is a public consultation currently underway to determine the future practices of the Financial Reporting Council (FRC).
Any business that currently gets audited or is likely to need one in the future should understand how things are likely to change in the wake of the consultation.
What changes might happen with the FRC?
The public consultation is focused on perceived inefficiencies with the way that the FRC manages audit resolutions.
At present, there exists a binary option for handling issues discovered during an audit.
The FRC can privately engage with the business to address the concerns or engage in a more public investigation to tackle deeper issues.
There are times when businesses feel like those investigations are too long and take up valuable resources that could be better served elsewhere.
The FRC has acknowledged these concerns and is seeking to introduce a three-pronged approach to tackling deeper investigations.
The potential routes will be:
- A published constructive-engagement option to share learning more widely
- An accelerated procedure for clear-cut cases or admissions of failure
- An early-admissions route where firms accept responsibility under FRC oversight in return for a quicker resolution
The aim is swifter, more proportionate action that reserves full investigations for the most serious public-interest cases.
How might the changes to audits impact businesses?
For any businesses that have been the recipient of a lengthy audit resolution, the proposed changes may be a welcome indication of the future.
Many business owners have a perception that audits are inefficient to the point where they often miss the benefits of having an audit due to a fear of time-consuming investigations.
If the changes to the FRC are introduced, it could help business owners feel more confident when approaching audits.
We know that audits are an essential part of business management and growth, far beyond the compliance measure that compels businesses to be audited.
The changes also aim to implement more transparency and a greater range of educational opportunities that could drive further improvement of auditing standards and operational practices for businesses.
How can you influence the outcome of the consultation?
The FRC has invited views and set a deadline for responses.
If you have experience of drawn-out investigations, unclear expectations or inconsistent enforcement, this is a moment to be heard.
Responding to the consultation helps shape a framework that will affect your auditors, your audit costs and how quickly issues are resolved.
The consultation is open until 9 January 2026 and the proposed changes are scheduled to be implemented from 1 July 2026.
Be sure to respond to the consultation before the deadline to have your say.
In the meantime, knowing that reform is on the horizon means that this is the time to assess your current operational practices.
If you find audits inefficient and time-consuming, consider improving your own record-keeping to ensure that an auditor can retrieve all the information they require.
While some delays are beyond your control, many auditors do express frustration at not being able to get the documents they need in a timely fashion, so it is worth understanding how to effectively prepare for an audit.
Consider making a note of everything that was required in your most recent audit or seeking professional support to understand the most effective ways to prepare for an audit.
We are hand to help you with all of your auditing needs so that you can make audits more efficient and improve the financial health of your business.
For more efficient and effective audits, speak to our team today!