The Chartered Institute of Internal Auditors (Chartered IIA) is the latest professional body to reiterate ICAEW’s calls for audit reform after the organisation wrote to senior government ministers to urge them to move forward with plans.

The body has written to UK Prime Minister Rishi Sunak, Chancellor Jeremy Hunt and Business Secretary Grant Shapps saying that the current economic volatility is underlining the need for reform, including legislation for a strengthened internal controls regime, to support businesses to manage their risks and weather the storm.

In the letter, the Chartered IIA calls on the government to provide a “clear schedule” for its intentions to reform the country’s audit industry to secure long-term economic resilience and stability. 

In May this year, the government under Prime Minister Boris Johnson unveiled its audit and corporate reporting plans following the previous year’s consultation process. They included the announcement of a new corporate reporting and audit regulator, increasing accountability for big business and “addressing the dominance of the Big Four audit firms”.

But although the government has committed to publishing a draft Audit Reform Bill, a clear timetable for when this will happen has yet to be communicated by the Department of Business, Energy and Industrial Strategy. 

The lack of a clear timetable for when these proposals will be put into place is concerning, the Chartered IIA says. It is particularly concerned that proposals that would strengthen internal controls have been shifted to the UK’s Corporate Governance Code instead of being tabled for legislative action.

John Wood, Chief Executive of the Chartered IIA, said: “To maintain Britain’s position as a global leader in first-class corporate governance and to deliver greater economic resilience, the new government must get on with audit reform. The new Business Secretary must publish the draft Audit Reform Bill without delay, along with the statutory instruments needed to make Audit and Assurance Policies and Resilience Statements a new requirement.”

The Bill aims to rebuild trust in the UK’s audit, corporate reporting and corporate governance system, further reinforcing the UK’s reputation as a world-leading destination for investment. Greater transparency would give investors clarity and assurance and aid the financial robustness of businesses.

Baroness Natalie Bennett and Darren Jones MP, the Chair of the influential cross-party Business, Energy and Industrial Strategy Committee, have tabled fresh parliamentary questions to the new government asking for a detailed update on audit reform in the UK, as there has been little traction since the Government committed to publishing a draft Audit Reform Bill in the Queen’s Speech earlier this year.

Meanwhile, the pair have tabled further questions in the House of Lords and House of Commons respectively regarding the government’s commitment to audit reform in the UK. The new Business Secretary Grant Shapps MP has been asked to clarify what progress has been made with the draft Audit Reform Bill as there has been nothing more since the government published its feedback statement earlier this year.

Iain Wright, ICAEW Managing Director, Reputation and Influence, said: “Audit and corporate governance reform is essential for restoring public trust and investor confidence, and almost five years on from the collapse of Carillion is long overdue.

“Legislation to establish the Audit, Reporting and Governance Authority needs to be introduced at the earliest opportunity, and we urge the government to include this in the King’s Speech.

“Done right, these reforms will help to restore trust, enhance the UK’s reputation as a great place to do business in the global economy, increase choice and improve quality in the market and we would like to see government give this reform package the legislative push priority it needs and deserves.”