Promised by successive governments for nearly a decade following a string of audit scandals from Carillion to BHS, reform of the audit market has now been dropped, with the only measure going ahead being the refocusing of the Financial Reporting Council (FRC) with new statutory powers.

Audit reform was one of the key bills in the Labour government’s first King’s Speech, which was a surprise at the time, but the Audit Reform and Corporate Governance Bill has now been canned. This means that the FRC will not be given any additional powers to oversee misconduct by directors related to financial reporting and accounting.

Blair McDougall, minister for small business and economic transformation, has written to MPs on the Business and Trade Committee, confirming the decision.