Audit, Reporting and Governance Authority to replace the FRC

The uncertainty surrounding the government's future plans for the Audit, Reporting and Governance Authority (ARGA) has been removed. (see our previous update on this topic: UK Corporate law: what's the impact of last week's general election?).

The King's Speech earlier today referred to proposals to strengthen audit and corporate governance in the UK. These proposals will be set out in the Audit Reform and Corporate Governance Bill.

The background notes also published today (see  King's Speech 2024 background briefing) make it clear that ARGA will replace the Financial Reporting Council. ARGA will also be given enhanced enforcement powers.

Four further key changes are highlighted at this stage:

• First ARGA will have a wider remit. This will be achieved by extending Public Interest Entity status to the largest private companies. 
• Second unnecessary rules on smaller Public Interest Entities will be removed.
• Third, ARGA will be given powers to investigate and sanction company directors for serious failures in relation to their financial reporting and audit responsibilities.
• Fourth, the Bill will introduce a regime to oversee the audit market, protect against conflicts of interest at audit firms, and build resilience.

The FRC has welcomed the news:see FRC welcomes government legislation to modernise regulatory toolkit. 

If you would like to discuss this update, please speak to your usual contact at Burges Salmon or contact Nick Graves, head of the firm's Corporate Department. 

The King " Bills will be brought forward to strengthen audit and corporate governance..." 17 July 2024

https://www.gov.uk/government/speeches/the-kings-speech-2024