Unwelcome scrutiny

It’s official: audit is an “unattractive profession”. So says a report compiled for the UK’s governance watchdog, which looks at the reasons for audit firms, large and small, struggling to expand.

The Financial Reporting Council has a responsibility to nurture a “more resilient audit market” but it seems firms are struggling to find staff and that is “limiting their ability to grow”.

A new report says of a survey of audit firms: “There was widespread concern amongst the firms about the capacity shortage being driven by the unattractiveness of the profession. It was clear the attractiveness issue stemmed from a broad range of factors…”.

Those include “too much pressure” and clients’ “lack of appreciation”, but also a “lack of understanding of the auditor’s role”, and the killer blow: audit is “not a fun place to be”.

Lots to think about there for the regulator, including how to ensure auditors are appreciated (a clap for auditors?) and making audit a barrel of laughs (new colour-coded spreadsheets and party hats for site visits?). You might laugh but… actually, you probably won’t.

Post haste

There were bound to be more casualties. This week, Post Office chair Henry Staunton left the beleaguered company after apparently falling out with business secretary Kemi Badenoch.

Staunton’s departure does not appear directly related to the scandal which saw more than 700 sub postmasters wrongly convicted of theft or false accounting between 1999 and 2015 because of an accounting system, Horizon, that failed to work.

Staunton joined the Post Office in December 2022 but, according to the Financial Times, appears to have clashed with Badenoch over running of the board and the company.

If only the government had acted emphatically many years ago. Still, almost better late than never.

Standing in the way of control

Here’s a worrying thought: in many cases, it’s difficult to know who owns British companies. It’s a facet of corporate law that’s been bothering Nottingham Trent University law prof Elspeth Barry.

In an article for the Oxford Uni governance blog, she writes about recent admissions made by Doug Barrowman, husband to Baroness Michelle Mone and beneficiary of a highly controversial £60m, made by his company PPE Medpro from supplying pandemic PPE.

A December interview with the BBC saw Barrowman admit he was the “ultimate beneficial owner”. But, Berry points out, his name is difficult to find on any official documents.

That means, she writes, there is some much-needed reform to the way “people with significant control” (PSC) are disclosed in Companies House filings.

“What is needed, as a minimum,” writes Berry, “is for the government to resource Companies House to verify PSC data, close loopholes by prohibiting declarations that there is no PSC and reducing or removing the ownership and voting thresholds, and check up on corporate PSCs since they can obscure the real controllers.” Seems reasonable. After all, why be shy?