Driven by the government’s consultation paper on ‘Restoring trust in audit and corporate governance’, along with a steady stream of big-name corporate failures, auditing is currently a hot topic in the UK. Businesses such as BHS, Thomas Cook, Carillion and Patisserie Valerie have all featured in the news, in a large part because they have experienced significant financial issues that were apparently not picked up by auditors.
The British government’s plans for the future regulation of the audit industry set out in the paper are not fit for purpose.
As they stand, these proposals will not help prevent future corporate failures and restore trust in the practice. What the audit process needs, with its ingrained, long term institutional issues, is root and branch reform – a revolution and not an attempt at a patch up job.
The UK’s reputation for good governance will be in jeopardy if the proposals in the consultation paper are adopted. The country will struggle to maintain its position as one of the best places in the world to do business at a time when it’s looking to move forward after Brexit and the pandemic.
