Britain urged to move on protracted audit market shake up

·2-min read
FILE PHOTO: A pedestrian walks past a British Home Stores branch in Chesterfield

By Huw Jones

LONDON (Reuters) - The collapse of builder Carillion and other corporate scandals showed a need to act quickly to improve auditing in Britain, a group of more than 50 businesses, trade unions and lawmakers have told the government.

In a letter to British Prime Minister Boris Johnson and business minister Kwasi Kwarteng, the signatories expressed "grave concern" over media reports that audit market legislation will not be included in the upcoming session of parliament.

Recent scandals exposed gaps in Britain's corporate governance framework and reduced trust in business, said the letter made available to the media.

"These changes are not contentious and have wide support across the business community and wider society," the letter said.

Following the Carillion debacle and collapse of retailer BHS, three government-backed reviews recommended creating a more powerful audit watchdog, injecting stronger competition into the audit market, and beefing up corporate governance.

Many of the reforms need legislation to implement.

"It is our view that these changes are necessary and timely," the letter said.

It also called for updating Britain's companies act so that directors' responsibilities to shareholders are aligned with their social and environmental impact.

The letter was signed by the Institute of Directors, Anglian Water, the Trades Union Congress and the Better Business Act coalition.

A government spokesperson said the government will set out its legislative programme for the next parliamentary session in the forthcoming Queen’s Speech on May 10.

"Our 2021 white paper set out wide-ranging proposals to tackle problems in corporate reporting and audit, including strengthening the powers of the regulator, and we will publish our response to the consultation shortly," the spokesperson said.

Without legislation, the current audit watchdog, the Financial Reporting Council, has resorted to putting pressure on the EY, KPMG, Deloitte and PwC, the "Big Four" auditors which dominate the sector, to make voluntary changes to their operations.

(Reporting by Huw Jones; Editing by Tomasz Janowski)

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