Audit, Reporting and Governance Authority

The Audit, Reporting and Governance Authority is a proposed audit regulator intended to be established in the United Kingdom to replace the Financial Reporting Council. The government launched a consultation on the new regulator in March 2019, and the new regulator is expected to be fully implemented in 2023.

Background

Kingman Review

Following accounting irregularities at companies such as Carillion, Patisserie Valerie and BHS, the UK government ordered a review of the current supervisory environment by the Financial Reporting Council (FRC). The review was led by Legal & General Chairman Sir John Kingman.[1]

The review recommended the urgent introduction of a new regulator, the Audit, Reporting and Governance Authority, which should be accountable to Parliament, with the intention to provide more effective oversight and address a concentration in the industry - the Big Four audit firms' market share with FTSE350 firms being 98% at the time of the report.[2][3][4]

In March 2019 Business Secretary Greg Clark announced he would implement the recommendation from the Kingman Review in 2019.[5][6]

Legislation

Plans for the new regulator were included in the September 2019 Queen's Speech and, despite concerns that the launch of ARGA might be delayed, the Department for Business, Enterprise and Industrial Strategy (BEIS) told Accountancy Daily in February 2020 that "next steps on audit reform" would be taken in the first quarter of 2020.[7] However, further details were slow to emerge; in November 2020 City A.M. reported that reform proposals relating to the audit sector were expected in early 2021 with full implementation expected in 2023.[8]

Leadership

In July 2019, Clark announced that Simon Dingemans, formerly CFO at GlaxoSmithKline, had been appointed as the new chair of the Financial Reporting Council, and would lead its transition into the Audit, Reporting and Governance Authority.[9] However, he left the role in May 2020, citing conflicts between the part-time role and other positions he was interested in taking.[10]

References
  1. "Kingman review | Institute and Faculty of Actuaries". www.actuaries.org.uk. Retrieved 2019-03-17.
  2. "Kingman Review says FRC should be replaced 'as soon as possible'". www.consultancy.uk. Retrieved 2019-03-17.
  3. "Subscribe to read". Financial Times. Retrieved 2019-03-17. Cite uses generic title (help)
  4. "Government and profession back Kingman review". economia.icaew.com. Retrieved 2019-03-17.
  5. "UK audit watchdog to be replaced by new governing body". bbc.co.uk.
  6. "Audit regime in the UK to be transformed with new regulator". www.gov.uk.
  7. White, Sara (6 February 2020). "Plans for ARGA audit regulator due by end March". Accountancy Daily. Retrieved 30 December 2020.
  8. Godfrey, Hannah (13 November 2020). "BEIS audit reform proposals expected to be made public in the new year". City AM. Retrieved 30 December 2020.
  9. "New Chair of Financial Reporting Council announced". Gov.uk - Department for Business, Energy & Industrial Strategy. 23 July 2019. Retrieved 23 July 2019.
  10. Carrick, Angharad (15 June 2020). "Former FRC chairman Simon Dingemans joins Carlyle". City AM. Retrieved 15 June 2020.
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