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UK ministers explore the abolition of the most striking promised audit rules for private companies, as the government seeks to retreat from the organization in an attempt to enhance economic growth.
Business Secretary Jonathan Reynolds and Labor Minister Justin Maders have met with large audit companies and senior investors in recent months to discuss mitigating or canceling reforms that would define about 600 “public interest entities” companies, according to people familiar with the talks.
The former conservative government has pledged to reform the UK audit systems after many prominent companies, such as Carrylion, BHS, and the Batiseri Valerie cafes chain.
In 2021, the ministers suggested rating the largest private companies and companies listed on the stock exchange as general benefit entities. After the BHS collapsed, they have moved questions about whether the operations of companies not listed more deeply should be scrutinized to prevent similar failures.
This classification would put the audits of approximately 600 unlisted companies with 750 employees and more than 750 million pounds in their annual sales volume under a more striking regulatory system supervised by the Financial Reports Council (FRC).
Reynolds told the Financial Times in 2023 that if the Labor Party won power, it will push the long -awaited reforms. But one of the people familiar with government thinking said that the reforms are now “an old history” because it was seen the most striking requirements as “another obstacle and a growth ceiling.”
The source added that with Reynolds concern that the proposals will motivate companies to reduce the number of their employees to less than 750 employees or move abroad, the government may instead collect a list of the companies chosen “for qualitative importance” or completely abandon the proposals.
In recent weeks, the ministers have pledged to continue growth, and last month they ordered 17 of the largest regulatory bodies to develop measures to enhance the economy.
Tuesday the government Out of The head of the Competition Regulatory Authority after he saw that the agency did not focus enough on growth.
For the first time in 2018, the FRC committee was assigned to improve the quality of the audit after a series of prominent failures. The former conservative government set a package of reforms, which included replacing the current organizational body with the most powerful audit, reporting and governance.
But Diluted The proposals in 2022, which reduces the number of new executing entities from 2000 to 600.
The auditors complained of the tougher scrutiny that the organizational authority applies in relation to the PIES, where the 10 largest Grant Thornton companies said they switched 70 percent of its business in PIES in the five years until 2022.
Use The first king's speech Last year to promise a draft law to reform auditing and corporate governance. One person said the legislation project may still include the current PIE proposals, and the ministers can choose to discuss the details in Parliament.
One of the Reynolds allies said that the minister is still open about the “specified thresholds” that must be applied to PIE, adding that the Minister of Business was carefully listening to views on this issue and considering the broader economic impact of audit reforms.
The Ministry of Business and Trade said it would welcome the ideas of the parties concerned before the bill was published later this year.
The ministry added: “Our maximum priority is to enhance the economy and raise the living standards for workers, and for this reason our audit reform focuses on growth and support for business for investment.”
