The FT has reported this morning that:
Directors will be held personally responsible for the accuracy of their company's financial statements – with fines and bans for major failures – as part of far-reaching proposals to overhaul UK corporate governance and audit oversight.
Kwasi Kwarteng, the new business secretary, will publish long-delayed reforms in a white paper as early as next week.
I am now working part time on audit reform, and will be over the next year as a result of a grant from Luminate. The work is linked in my case to that being done by colleagues at Sheffield University. We were expecting this announcement.
Quite clearly what is being trailed is not enough to transform audit failure. It's very strange that the government think it might when it is already possible for the directors of a company to have personal liability for the debts of a company if it fails, which is the only occasion when this new measure is likely to have much impact.
Rumour has it that there are at least 100 recommendations in the forthcoming consultation document. I hope many are better than this one, which seems more token gesture than something of substance.
What is certain is that there will be much to work on. And I will be talking about it here given that it is likely to dominate my work over the next few months.
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Hopefully it’s a positive start!
Reintroduce proper controls via companies house too and it might be a step in the right direction
Well if you are running a large bank like RBS or HBoS or Lehmans ,then failure has much wider implications, one would hope that such events are stopped way before it gets to that stage.
Good luck, I look forward to reading your work.
It would be a start if they reversed the short-sighted deregulation from 2016 which saw proper annual returns replaced with the useless “confirmation statement”, and extended the ability to file almost contentless one-page accounts. The bare minimum should be an annual statement, and annual accounts with a balance sheet and profit and loss account (or whatever they are called nowadays). And then sufficient funding for Companies House to ensure the mandatory requirements are met, with adequate penalties if they are not.
Agreed, entirely