Natalie Todd, partner at Cooke, Young & Keidan, assesses the key FRC proposals on audit reform and what action it will take before the government legislates for the creation of a new audit regulator
Following on from the government’s response to the consultation on strengthening the UK’s audit, corporate reporting and corporate governance systems, the Financial Reporting Council (FRC) issued a paper on 12 July 2022 setting out how it intends to support the government’s reforms in the transition to the new Audit, Reporting and Governance Authority (ARGA).
The ARGA will have the powers to investigate and sanction breaches of public interest entities’ (PIE) directors’ duties relating to corporate reporting and audit. A PIE is a private company with more than 750 employees and a turnover of more than £750m.
A significant proportion of the proposals contained in the government response require legislation. The FRC’s paper outlines the actions the FRC intends to take ahead of that legislation in order to drive behavioural change.
