Audit reform needs to pick up the pace, ministers told
‘Audit scandals highlight the need for the Government to tackle this issue as a matter of urgency’
FOOT-DRAGGING over audit reform needs to end or there will be more high profile corporate failures like those at Thomas Cook, Carillion and BHS, MPs have warned.
Ministers must set out an urgent time frame for abolishing the Financial Reporting Council (FRC) accounting watchdog after a report two years ago found it was not fit for purpose, the business select committee said.
City grandee Sir John Kingman called for the FRC to be replaced in an independent study released in December 2018, comparing it to a “ramshackle house”. But this has not yet happened despite bookkeepers repeatedly failing to spot problems at major companies.
Travel agent Thomas Cook collapsed last year, stranding 150,000 British tourists abroad and sparking a business committee inquiry, which raised questions over the firm’s accounts and why auditors signed its finances off.
Darren Jones MP, committee chairman, said: “Audit scandals highlight the need for the Government to tackle this issue as a matter of urgency. At a time when businesses are facing tough trading conditions, it’s important investors and other stakeholders can have confidence in audits.”
The Government has said it is committed to audit reform.