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The United Kingdom Ministers are exploring further installation legislation aimed at reforming the audit market as they seek to facilitate the regulation of businesses in an impetus to increase economic growth.
Ministers who oversee the audit reform and the draft law of corporate governance have discussed the casting of a measure that would force large Big Four accounting firms to share audits of larger companies with smaller firms, according to four people familiar with this issue.
The measure may actually occupy the legislation, which the lab had promised to approve if it won the 2024 general elections, while two other main reforms also risk being irrigated or housed.
The previous conservative government had proposed the mandate of joint audits so that FTSE 350 companies registered in the UK using a large four auditor will have to transfer a “significant” part -ose 10-30 percent of audits theirs for challenging firms in a “little little” role.
The proposal aimed to reduce confidence in the Big Four – Deloitte, EY, KPMG and PWC – and ease concerns about the risk of systemic failure if a firm collapsed. About 88 percent of FTSE 350 firms used one of four in 2023.
It was planned as part of a wider legislative push to strengthen the UK Audit and Corporate Governance Framework following numerous high -profile and audit corporate failures, including Carillion external transfections and seller with retail bhs.
But most accounting firms have not welcomed the prospect of joint audits, and companies that will be affected by the fear of being fearing higher tariffs, according to three of the people familiar with the discussions of ministers.
A government figure confirmed that business secretary Jonathan Reynolds was watching the obligation to make a joint audit in the draft law – an action that would “reduce business costs” at a time when government advantage is economic growth.
The person stressed that a recent decision had not been made and that Reynolds was still talking to the Financial Reporting Council, the accounting regulator, on the matter.
The four big firms do not want to share their work, while some challenging accounting firms also oppose the changes. They are concerned that by labeling the “small” audit partner can limit their ability to provide FTSE 350 audits independently while they expand.
Concerns that shared audits could copy work and raising fees were also behind the proposal opposition, two of the people said.
Common casting audits could leave the draft law, as two of its other major reforms were introduced under a renewable control.
Proposals to reclassify the largest private companies in order for them to be subject to stronger regulatory control, are already at risk of being awarded, and a second proposal to make the directors of the firms responsible for failure can be watered.
Reynolds told The Financial Times in 2023 that if the job was to gain power, it would cross the late reforms in the audit market.
Last year, the government used its King’s first speech to promise a -law on audit reform and corporate governance, which included replacing the current regulator with the most powerful audit, reporting and governance authority.
But a person acquainted with ministers’ discussions with the industry said the draft law was proven difficult to design, and could be delayed beyond spring.
Baroness Margaret Ford, head of the Public Interest Center Audit, a lobby group, said she would be “disappointed” if ministers would subtract “designed proposals to promote the trusted resistance and reporting in the market”.
“If the government is serious about accountability and audit quality, it must ensure that this bill gives strong changes promised to the profession,” she said.
The Department of Business and Trade said: “The government wants to ensure that it has an elastic and competitive audit market in the United Kingdom. It is carefully considering how to achieve that goal.”
