Various UK organizations have expressed ‘profound disappointment’ at the Government’s decision to drop the major package of audit and corporate governance measures that it has been considering. This follows previous decisions to row-back on risk and resilience related governance reform, including decided not to proceed with requiring large UK organizations to publish an annual Resilience Statement.
The announcement was made in a letter from the Minister for Small Business and Economic Transformation, Blair McDougall, to the Chair of the Business and Trade Committee.
In response the Chartered Institute of Internal Auditors coordinated an open letter to the Secretary of State for Business and Trade.
The signatories include the Institute of Directors, NEDonBoard (Institute of Board Members), ShareAction, the UK Shareholders Association, the Better Business Act campaign, leading academics, and senior non-executives from major UK companies.
The letter points out that eight years on from the collapse of Carillion in 2018 — and despite repeated commitments, including in the King’s Speech — not a single piece of legislation has been delivered. The group warns that this failure to act leaves the UK exposed to further avoidable corporate collapses. They are urging the Government to publish its modernised corporate reporting proposals without delay and to prioritise establishing a strengthened statutory audit regulator.
The full text of the letter reads as follows:
Dear Secretary of State for Business and Trade
We are writing to express our profound disappointment at the Government’s decision not to proceed with an Audit Reform and Corporate Governance Bill. This represents a significant step backwards, particularly after the commitment made in the King’s Speech to publish a draft Bill. After years of delay, this latest announcement is extremely concerning.
This month marks eight years since the collapse of construction giant Carillion, the very event that sparked calls for reform. Yet, despite multiple independent reviews, a comprehensive White Paper and repeated public consultations, not a single piece of legislation has been passed.
Since Carillion, we have witnessed a further series of major corporate failures linked to weaknesses in audit and governance – Bulb, ISG, Patisserie Valerie, Thomas Cook and Wilko among them. These failures have had a devastating impact on the economy, costing tens of thousands of jobs, damaging the value of people’s pensions, and hurting thousands of small businesses across supply chains. If the Government is serious about driving growth and delivering economic stability, it must act to prevent further avoidable failures through stronger oversight of our largest companies.
The Government has stated that it remains committed to reform and to putting the Financial Reporting Council on a statutory footing with the powers it needs to do its job effectively. We urge you to publish the proposals for a modernised corporate reporting framework without delay, and make it a clear priority to deliver the strengthened audit regulator.
Signatories:
- Prof Mike Power FBA FCA, Professor of Accounting, London School of Economics and Political Science
- Anne Kiem OBE, Chief Executive, Chartered Institute of Internal Auditors
- Jonathan Geldart, Director General, Institute of Directors
- Jean-Philippe Perraud, Chief Executive, NEDonBoard, Institute of Board Members
- Catherine Howarth, Chief Executive, ShareAction
- Chris Turner, CEO of B Lab UK and Campaign Director of the Better Business Act
- Charles Henderson, Chairman, UK Shareholders Association
- Prof Andrew Chambers, Former Specialist Advisor to the House of Lords’ Economic Affairs Select Committee’s Inquiry into Auditors: market concentration and their role
- Byron Grote, Non-Executive Director at IHG and Inchape PLC
- Adam Leaver, Director, Audit Reform Lab
- Mary Hardy, Chair of Audit and Risk Committee, Commonwealth Sport
