Below is an excerpt from ISS’ recently released report titled “The Purpose of Audits: A Look at Developments in the United Kingdom”. The full report is available to institutional subscribers by logging into ProxyExchange then selecting the Knowledge Center and its Library tab and to corporate subscribers by logging into Compass then selecting Governance and the Governance Library or Governance Exchange tab.
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This paper was originally published in early 2024. At that time, the momentum behind audit reform appeared to have slackened. The King’s Speech in November 2023 – in which the government defines its legislative priorities for the parliamentary session ahead – excluded a timetable for the introduction of a new regulator. Many of the audit reforms discussed in this paper pivoted on the creation of this empowered regulator (the Audit, Reporting and Governance Council, or ARGA). In this context, the omission of a timetable for its establishment indicated that reform had been relegated in the hierarchy of political priorities.
Since that time, a Labour government was elected in July 2024 and the first King’s Speech under the new regime featured prominent reference to the intended creation of ARGA. With the re-prioritisation of audit reform, it seems apposite to update this paper on the background to such reform, and the measures proposed.
The paper examines the various dynamics at play in the UK audit market, the proposals that have been forwarded to restore confidence in audit, and the likely next steps. While the focus is on the UK market, many of the issues discussed may have global resonance.
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By: Mary Punch, UK Benchmark Research, ISS Governance
