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BEIS Consultation: Reforming the UK's corporate governance, audit and reporting regime

On 18 March 2021, BEIS published its consultation on reforming the UK's corporate governance, audit and reporting regime, which includes almost all of the 155 recommendations drawn from the reviews undertaken by Sir John Kingman, the CMA and Sir Donald Brydon. The deadline for responses to the consultation was 8 July, 2021.

Through focus groups, we engaged with many stakeholders to understand their perspectives on the consultation, and in a series of live events, recorded discussions, blogs, and FAQs we have given our perspectives on the consultation, our thoughts for the future, and things for stakeholders to consider as they work out what it might mean for them. These are all contained in the sections below, starting with an overall summary of the consultation and our focus group discussions. This is followed by a more indepth look at the five key proposals and insights into the potential practical implications they might have for companies, audit committees and other stakeholders.

Hemione Hudson

“The BEIS consultation on reforming the UK's corporate governance, audit and reporting regime marks an important step in increasing trust and confidence in UK business. The proposals have wide-reaching implications for companies, auditors, directors and other stakeholders. As the responses to the consultation are considered by BEIS, I encourage all interested parties to continue to engage with the debate. The whole corporate ecosystem has a role to play to help achieve a set of measures that lead to positive, lasting change.”

Hemione Hudson, Head of Audit, PwC UK

Understanding the key proposals in the consultation

Managed shared audits

The consultation includes a proposal that would require a meaningful portion of the audit of FTSE 350 companies to be performed by a non-big four firm.

Audit and Assurance Policy

The consultation outlines a requirement for an Audit and Assurance Policy that sets out what assurance is being commissioned over the whole annual report and other corporate information - subject to shareholder comment and advisory vote.

Director accountability

Under the proposals, all directors of PIEs are to be held accountable for their reporting responsibilities and subject to increased regulatory scrutiny and enforcement powers. There are aso proposals to strengthen the role and responsibilities of audit committees, subjecting them to more regulatory scrutiny and potential inspection and observation of their activities.

Strengthened internal controls

The consultation includes a proposal that the UK should adopt a version of the US Sarbanes-Oxley rules and require directors to attest to the effectiveness of internal controls over financial reporting.

Expanding the PIE definition

The consultation proposes expanding the definition of Public Interest Entities (PIEs) to include large AIM and large private companies.

Practical insights into the key proposals

As stakeholders think through the possible practical implications of the key proposals, we have compiled some insights for consideration.

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“The‌ ‌Government's‌ ‌consultation‌ ‌brings‌ ‌an‌ ‌opportunity‌ ‌for‌ ‌the‌ ‌UK‌ ‌to‌ ‌lead‌ ‌on‌ ‌corporate‌ ‌governance‌ and‌ ‌maintain‌ ‌its‌ ‌position‌ ‌as‌ ‌a‌ ‌world‌ ‌leading‌ ‌capital‌ ‌market.‌ ‌To‌ ‌meet‌ ‌this‌ ‌ambition,‌ ‌the‌ ‌more‌ ‌companies‌ ‌that‌ ‌take‌ ‌the‌ ‌time‌ ‌to‌ ‌understand‌ ‌what‌ ‌the‌ ‌proposals‌ could mean‌ ‌for‌ ‌them‌ ‌and‌ engage in the ongoing debate,‌ ‌the‌ ‌greater‌ ‌the‌ ‌prospect‌ ‌that‌ ‌the‌ ‌reforms‌ ‌will‌ ‌enhance‌ ‌the‌ ‌business‌ ‌environment‌ ‌and‌ ‌build‌ ‌trust‌ ‌and‌ ‌confidence‌ ‌in‌ ‌the‌ ‌UK’s‌ ‌reporting‌ ‌and‌ ‌regulatory‌ ‌frameworks.”‌

Marco Amitrano, Head of Clients and Markets, PwC UK
Marco Amitrano

Contact us

Hemione  Hudson

Hemione Hudson

Head of Audit, PwC United Kingdom

Sotiris Kroustis

Sotiris Kroustis

Partner, PwC United Kingdom

Tel: +44 (0)7841 490 928

Gilly Lord

Gilly Lord

Head of Audit Strategy & Public Policy, PwC United Kingdom

Tel: +44 (0)20 7804 8123

Marco Amitrano

Marco Amitrano

Head of Clients and Markets, PwC United Kingdom

Jayne Kerr

Jayne Kerr

Director, Audit Strategy & Public Policy, PwC United Kingdom

Tel: +44 (0)7740 241129

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