“The completion of this reform agenda is urgent in order to restore confidence to the financial markets”
On Friday The Chartered Governance Institute UK & Ireland wrote to Kemi Badenoch to remind the government about the need to complete audit reform. Its now over six years since Carillon plc failed (January 2018) and yet the markets are still waiting for key changes that will restore confidence in financial statements.
In a strongly worded letter, Sara Drake, CEO of CGIUKI, wrote:
“Nearly two years have passed since your predecessor published a 197 page White Paper setting out the Government’s plans for audit reform. The White Paper asserted that: “action is needed to rebuild trust in audit and corporate reporting”, a sentiment which met with wide agreement. In the White Paper, the Government pledged: “we will ensure that all of the main parties who play a role in financial reporting can be, and are, held to account if they fail to fulfil their responsibilities”. This pledge remains undelivered.”
“The failure to complete reform has undoubtedly contributed to the persistence of the delisting problem which plagues the London markets.”
“The Government’s capricious abandonment of the long-planned White Paper represented a colossal waste of Government time and public money, sent a bad signal about this Government’s commitment to responsible capitalism, and left business leaders and investors in a state of uncertainty.”
The letter urged the government to make six urgent changes to company law and the regulatory regime.
- The clarification of directors’ duties regarding disclosure of information.
- Disclosure of distributable reserves of in scope companies and groups.
- An expansion of the scope of regulation to include all large private companies (using the formula 750:750).
- S271 of Companies Act 2006 (employment of a professionally qualified company secretary) should be extended to apply to all large private companies.
- New powers to direct changes to the entire contents of the annual report and accounts, rather than having to seek a court order.
- New powers to investigate and sanction directors (including directors of large private companies) for breaches of their corporate reporting and audit-related duties and responsibilities
The full letter is here.
For more information, please Contact Daniel Valentine on dvalentine@cgi.org.uk
