Businesses are continuing to balance the competing challenges of inflation, rising energy costs and the increasing risk of fraud, as well as the growing impact of climate change on their business and reporting. When faced with uncertainty, the organisations that tend to be most successful are those with robust systems in place to deal with risk. This means that investors will increasingly be looking for companies who not only embed robust governance and controls, but ensure they establish and maintain transparency around their effectiveness.
Responding to uncertainty and risk
Against this backdrop of the continued uncertainty facing organisations, I was pleased to see in the Queen’s Speech that the Government has committed to progressing draft legislation on reforming the UK’s corporate governance, reporting and audit regimes.
While this means that any legislation won’t realistically be implemented until 2024, it moves forward the commitment to reform outlined by the Government in the BEIS consultation last year. At that time, we supported a great many of the consultation’s proposals, and believe the need for changes to the UK’s corporate governance and reporting regimes has only increased.
Many of the Government’s proposals included in the BEIS consultation are critical to increasing confidence in UK businesses by strengthening the whole system of governance, risk management and control, and ensuring there is better communication and transparency in corporate reporting. All of which we expect to deliver better outcomes for the UK economy.
We recognise that audit firms have a responsibility to continue to invest in audit quality and this is an ongoing priority for PwC. We also believe that there are many benefits to be gained by companies taking steps now to proactively adopt a number of the proposals outlined in the consultation.
To be successful, reform needs to address the interdependencies and responsibilities of all relevant market participants. We recognise that audit firms have a responsibility to continue to invest in audit quality and this is an ongoing priority for PwC. We also believe that there are many benefits to be gained by companies taking steps now to proactively adopt a number of the proposals outlined in the consultation.
To help companies do this, we have developed our “Restoring Trust series” which contains practical guidance to help organisations identify and implement changes to their corporate governance, reporting and audit processes.
As businesses continue to navigate increasing uncertainty, I am confident that many will recognise the benefits that investing in their governance and controls will bring.