There will be no progress made on an audit reform and governance bill in the current session of this Parliament, according to a government minister.

A written statement from the Department for Business & Trade (DBT) makes it clear that the government is focused on cutting regulation, not tightening rules around auditors and audits.

Responding to a written question, Blair McDougall, under-secretary at the DBT, writes that there is no intention to publish a draft audit and corporate governance reform bill in the current session that is due to end before the summer.

McDougall says: “Priority is being given to measures that reduce administrative costs for business, including through the department’s work on modernising corporate reporting.”

The statement will come as a disappointment to many in the sector who have long argued that the government should push ahead with long discussed reforms to bolster regulation of the audit sector.

Last year, the Institute of Internal Auditors reiterated its belief that the UK is in need of change by coordinating a group of more than 60 MPs in the House of Commons to write to the prime minister calling for progress on reform.

Writing for Board Agenda, Gavin Hayes, argued: “The reality is that the absence of meaningful audit and corporate governance reforms is undermining the UK’s economic growth potential.”

Since coming to power last year, the government has made a point of easing the burden of regulation. The chancellor, Rachel Reeves, famously described regulation as a “boot on the neck of businesses”.

ARGA saga

Audit reform proposals, formulated during consultations following the collapse of Carillion in 2018, were to include the creation of a new regulator—the audit, reporting and governance authority (ARGA)—to replace the Financial Reporting Council. The new watchdog would also have new powers over auditors and, potentially, company directors overseeing audit work.

Other proposals included the introduction of managed shared audit to give smaller “challenger” audit firms an opportunity to participate in big audit mandates.

However, despite being name-checked in the King’s Speech, an audit reform bill has yet to appear. It is unclear whether the government remains behind any of the proposed reforms.

Despite much discussion of reform, research published in November from the Centre for Public Interest Audit, a think tank, concluded investor confidence in audit is actually growing. Indeed, the figures show trust in the “independence and objectivity” of auditors growing from 85% to 100%, and satisfaction with the audit process lifting from 77% to 100%.

The government seems in no mood to act on anything that looks like increasing the regulatory burden of business. Reforms could emerge in the new session of Parliament, but these may be far from the original proposals.

Meanwhile, for the audit sector, reform remains a waiting game.