Political parties must make manifesto commitments on corporate governance and audit reform

19 November 2019

The leaders of the main UK political parties have been urged to make manifesto commitments on corporate governance and audit reform by the Chief Executive of the Chartered Institute of Internal Auditors, Dr Ian Peters MBE.

In a letter to political party leaders, Ian Peters calls on them to, “make a crystal-clear commitment in your election manifesto, to deliver as swiftly as possible, the corporate governance and audit reforms the country so urgently needs.”

Following the collapse of Thomas Cook, the Chartered Institute of Internal Auditors urged the government to, “get a move on with reforming the audit market and establishing the new Audit, Reporting and Governance Authority (ARGA) as swiftly as possible.”

A change in the law is required to give ARGA the powers and authority to do its job properly after it takes over from the FRC. On 7 October 2019 the Business Secretary said, "where legislation is required, as with reform to the audit market, the Government remains committed to legislating as soon as parliamentary time allows". But the Queen’s Speech on 14 October 2019 did not contain any audit reform legislation.

Dr Ian Peters MBE, Chief Executive of the Chartered Institute of Internal Auditors, said:

“Following the high-profile corporate collapses of Thomas Cook and Carillion, we believe corporate governance and audit reform should be a key priority for the next UK Government.

“The stakes couldn’t be higher. Over 150,000 holidaymakers stranded and taxpayers forced to pay over £100 million costs following the Thomas Cook collapse in September. And the Carillion collapse in 2018 led to thousands of job losses, delays to school and hospital building projects and over £140 million costs for tax-payers.

“Corporate governance and audit reform is vitally important for jobs, growth and the future of our economy. That’s why we have urged the leaders of the main UK political parties to make crystal-clear manifesto commitments on delivering the corporate governance and audit reforms the country so urgently needs.”

Notes for editors

1. The letters to the leaders of the main UK political parties are available here

2. Delays to audit and corporate governance reform:

• 18 December 2018 - Sir John Kingman’s review of the FRC concludes and recommends creating a new regulator (ARGA) for audit, corporate reporting and corporate governance.
• 11 March 2019 - The government pledges the new audit regulator (ARGA) will have "a new mandate, new leadership and stronger powers set down in law" and said, "the government intends to move swiftly to implement these reforms and overhaul the sector."
• 7 October 2019 - The Business Secretary said, "where legislation is required, as with reform to the audit market, the Government remains committed to legislating as soon as parliamentary time allows."
• 14 October 2019 - The Queen’s Speech did not contain audit reform legislation.
• 15 October 2019- Sir John Kingman expressed his disappointment that legislation to put the new audit regulator on a "proper statutory base and give it the powers to do its job" was not included in the Queens Speech.

3. The Chartered IIA is the only professional body dedicated exclusively to training, supporting and representing internal auditors in the UK and Ireland. We have over 10,000 members in all sectors of the economy. First established in 1948, we obtained our Royal Charter in 2010. About 1,000 of our members hold the position of Head of Internal Audit and the majority of FTSE 100 companies are represented among our membership. Members are part of a global network of 200,000 professionals in 170 countries.