In last week’s Kings Speech, new legislation was announced to strengthen audit and corporate governance to provide investors, employees, and consumers with greater confidence in the health of UK companies.
This ‘landmark’ legislation aims to address longstanding concerns about audit quality and corporate failures and aims to support long-term investment in UK companies and reduce the harm that financial reports errors can do to businesses and communities.
Commenting on this, Workiva GRC industry principal, Graeme Fleming, said: “The newly announced audit reform has been long anticipated by those in the industry. The reform was first raised in 2018 and has been on and off the table ever since, but it’s now firmly back on the UK Government’s agenda, as outlined in the King’s Speech.
“Introducing a new bill such as the Draft Audit Report and Corporate Governance Bill – including putting the Financial Reporting Council (FRC) on a statutory footing through the establishment of the Audit Report and Governance Authority (ARGA) – won’t happen overnight. It will be some time until a concrete timeline can be established. However, at this stage, we know that companies will have more work, more processes, and more complexity to contend with as well as a regulator with more teeth. It will therefore be critical that businesses get ahead of the game and start investing in solutions to the upcoming, complex reporting requirements.
“Business leaders must now recognise that the impact of this new governance and reporting framework extends beyond compliance and mandatory disclosures and can enhance their organisations reputation, strengthen relationships with stakeholders, and drive sustainable growth. Assurance and assurance ready processes are another vital component of trustworthy reporting. Embracing this transformation will enable businesses to thrive in an increasingly competitive and evolving marketplace, where transparency and responsible practices are not only expected but also rewarded. The time to act is now, as proactive preparation will give businesses a competitive advantage and pave the way for long-term success amidst evolving requirements.”
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