In a surprise announcement, audit reform was the second item on the King’s Speech presented by King Charles to parliament today.

One of the major changes to the original proposals will give the new regulator powers to sanction liable directors, not just audit firms.

Currently, directors of a company making incorrect financial statements can only be held accountable by the regulator if they are members of an accountancy body such as ICAEW or ICAS.

‘It is important that all directors in the UK’s most significant companies face consequences if they neglect their duties in respect of financial reporting, so the bill will allow for this,’ the government said.

The Draft Audit Reform and Corporate Governance Bill will replace the Financial Reporting Council (FRC) with a new regulator – the Audit, Reporting and Governance Authority (ARGA) – with the powers it needs to tackle bad financial reporting and to rebuild public trust in audit.

W