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UK ministers are exploring the possibility of getting rid of plans to introduce stricter audit rules for private companies, according to reports from the Financial Times.
Business secretary Jonathan Reynolds and employment minister Justin Madders have met big audit firms and big investors to discuss watering down or axing the reforms.
Reynolds told the FT in 2023 that if Labour won power it would push through the reforms.
The previous Conservative government promised to reform the audit systems in the UK as a result of several high profile failures such as Carillion.
In 2021, ministers proposed classifying the largest private companies and Aim-listed companies as public interest entities (PIEs).
The designation would place the audits of roughly 600 non-listed companies with 750 employees and more than £750mn in annual turnover under a tighter regulatory system overseen by the Financial Reporting Council (FRC).
Reynolds is reportedly worried that the proposals would incentivise companies to duck below the 750-employee mark or move overseas.
The proposals were already watered down in 2022 after the FRC reduced the number of PIE’s from 2000 down to 600.
Labour used its first King’s Speech last year to promise a draft Audit Reform and Corporate Governance bill.
