The UK’s new business secretary Kwasi Kwarteng has pledged to target Big Four audit reform, stating that accountancy overhaul is one of his “initial priorities” in office.
According to the Financial Times, Kwarteng, who began his position as business secretary on Friday 8 January, has promised to reform the British audit market, suggesting that previous efforts to shake up big four accountancy firms could resume in the coming months.
It follows efforts by his predecessor Alok Sharma, who previously delayed such a reform due to the ongoing Covid-19 pandemic. Sharma who served as secretary of business from 13 February 2020 to January 2021 has since been appointed COP26 president.
The quality and effectiveness of audits has previously been called into question, with Donald Brydon, the former chairman of the London Stock Exchange, raising concerns in 2019.
At the time, Brydon recommended strengthened standards for auditors, as well as changes to the way in which audit firms report their findings to the public. He also called for auditors and accountants to be separated into respective professional bodies, operating under separate licenses.
His recommendations have not yet been consulted on, however, with the government again citing the ongoing pandemic as a reason for its delay.
The department for business, energy and industrial strategy has now acknowledged, via the Financial Times, that audit reform “was a priority” for the previous secretary of state, and will “continue to be so under the current secretary of state”.
It added: “The government has accepted the findings of three independent reviews into audit and corporate reporting, and is committed to acting on their recommendations. We will respond with comprehensive proposals for audit reform in due course.”
In a statement, the ICAEW said the manifesto was an opportunity for auditors to “take full and appropriate responsibility” for modernising their profession, re-affirming the centrality of acting in the public interest and “enhancing trust in the audit process and in business generally”.