The Government “must introduce the new audit regulator legislation before the end of 2019”, a report has warned.
The call comes from the Chartered Institute of Internal Auditors (CIIA), who has this month urged the Government to establish the new regulator – known as the Audit, Reporting and Governance Authority – “under the swiftest possible parliamentary timetable”.
It comes after it was announced earlier this year that the current regulator, the Financial Reporting Council (FRC), was to be scrapped and replaced by a new governing body.
It follows the publication of the independent review led by Sir John Kingman, who addressed a number of shortcomings such as a lack of transparency and enforcement activity.
Announcing the move in March, the Department for Business, Energy & Industrial Strategy (BEIS) said the new regulator will have a “new mandate, new leadership and stronger powers set down in law”.
However, the CIIA is now calling for a rapid turnover of the regulator to ensure the UK remains “best in class” for corporate governance and to avoid another Carillion-style collapse.
The collapse of the construction giant in January – which critics say was entirely avoidable – sparked initial debate over how well regulated the audit sector in fact is.
Since then, a damning review has suggested the breaking up of the “Big Four” accountancy firms in order to ensure transparency and independence.
Commenting on the report, Dr Ian Peters MBE, Chief Executive of the CIIA, said: “A long delay to the replacement of the audit regulator, caused by increasing levels of political uncertainty, could increase the risk of more Carillion-style corporate collapses which have cost thousands of jobs and millions of pounds of taxpayer’s money.
“Replacing the FRC with the new Audit, Reporting and Governance Authority must be the government’s number one priority in raising corporate governance standards in the UK. A new audit regulator should be established under the swiftest possible parliamentary timetable with the legislation introduced in 2019. That means radical reform of the audit regulator taking months, not years.”
For more information on the proposed changes to the audit regulator, the consultation document can be read in full here.