The BEIS consultation set out to beef up audit and improve company reporting to ensure access to high-quality, focused and reliable information on UK companies in the aftermath of significant company failures including the 2018 collapse of Carillion. 

As part of the reform proposals, BEIS suggested that a new ethos and the wider scope of corporate auditing would require new skillsets. It also argued that a new professional body for auditors of all corporate information could help to elevate the status of auditors and reinforce their ethical and public interest obligations. 

However, ICAEW has warned that the establishment of a separate corporate audit body would prove a huge and costly distraction that would duplicate work in the sector, compromise the competitiveness of the UK and make it harder to work towards levelling up and reaching net zero. 

Under the current regulatory framework, all auditors have to possess an audit qualification granted by one of the five professional accountancy bodies, which are Recognised Qualifying Bodies (RQBs) and all auditors and firms have to be registered with one of the four Recognised Supervisory Bodies (RSBs).

At the same time, although ICAEW agrees that audit reform is needed now, it warns that setting up a new body will take years, if not decades, serving as a huge distraction to the sector and business alike. The suggestion is also at odds with moves to reduce complexity and slash red tape to enhance the UK’s competitiveness, ICAEW warns.

Meanwhile, ICAEW has also warned that the talent ramification of a separate audit body could be disastrous for the profession, believing that there is a likely risk that students will not be attracted to a profession that appears to limit their future career aspirations and opportunities. Already audit firms have highlighted the war for talent and the difficulties of attracting audit staff as a very real risk. 

Hazel Garvey, Managing Director, Education and Training at ICAEW said: “It is vital that audit continues to attract high-quality entrants who see diverse and fulfilling career prospects, and we think the breadth of qualifying and supervising bodies promote a wide range of opportunities. We don’t think that an audit-only body will be as attractive to young people, who will instead choose a different route into a career in business. That would be bad for skills and professionalism in UK businesses, bad for young people who may face having to pay to train elsewhere, and bad for audit, which will lose these talented recruits.”

Instead, ICAEW is calling on the government to work with the UK’s professional bodies to improve audit quality. “Together with other professional bodies we can deliver an inclusive profession to deliver government’s vision of ‘corporate audit’ and drive better audit quality.”

At the same time, ICAEW believes that as a professional body with a global membership, it is well placed to strengthen the identity of auditors and build on the work it has already done in improving standards. At the end of last year, ICAEW launched its Audit Manifesto, which outlined principles for a modern audit profession and shows how the profession could modernise with regulatory oversight.

“We’re a professional body with scale, resources, and the greatest share of the UK PIE and non-PIE audit market, so we’ve considered how we could create a home for and strengthen the identity of auditors. We want to create a space that’s a defined home for auditors, with a disciplined CPD regime and we will continue to review our qualifications and the whole audit process, to ensure auditors are trained and work at the highest level,” Garvey added.

Iain Wright, Managing Director, Reputation & Influence at ICAEW, said chartered professional qualifications in the UK are renowned throughout the world for their rigour, high quality and ethical grounding, built up over many decades. “They provide a strong competitive advantage for the UK, securing soft power and goodwill as well as hard currency from students becoming members of UK-based professional bodies. 

“We do not want this enviable reputation for the UK to be wrecked, with the profession becoming less attractive. Certainly, audit skills and competencies can and should be improved, but this should be achieved through building on existing qualifications, rather than an untried and untested new body with no reputation in the global economy whatsoever,” Wright added.