Speaking at an ICAEW conference, Sir Jon Thompson, chief executive of the Financial Reporting Council (FRC) outlined the new audit framework, including plans for a US-style SOX legislation to ensure board directors are held accountable for their business’ performance and the broadening of the audit oversight remit to bring in up to 2,000 more privately held companies which currently fall outside the scope of the audit regulator.

He confirmed that the replacement regulator, the Audit, Regulation and Governance Authority (ARGA) will be set up by April 2024 and recognised that the rule changes would see additional costs for business due to compliance requirements. These are likely to affect a small number of listed businesses which fail to follow the rigid rules set out in the current Corporate Governance Code, citing an instance where he spoke to an audit chair of a listed company, where the individual was the sole member of the committee, clearly contravening existing rules. ‘We think there are some distinct advantages on placing further obligations and transparency demands on private companies,’ Sir Jon Thompson said.

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