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Media comment: Reforming trust in corporate governance and audit

6 May 2022

Dear editor, 

There has been recent speculation that the government might not be minded to include the corporate governance and audit reform legislation in the next parliamentary session. This is not a new risk, and indeed The Chartered Institute of Management Accountants (CIMA) wrote to the Secretary of State for Business, Energy and Industrial Strategy more than two months ago, to express similar concerns.

From the outset there has been a focus on the audit aspects of the reform agenda, but external audit does not operate in a vacuum. It forms part of the wider corporate governance and reporting framework that oversees large corporate entities. The reform of this corporate ecosystem is overdue. 

The UK has a long tradition of leading on corporate governance matters. This is another milestone in that tradition and an opportunity to promote public and investor confidence in business for the future. The fact that UK business is pressing for the legislation speaks to the demand for change. Enhancing the UK’s reputation for world class corporate governance is another step towards securing the long-term attractiveness of the UK capital markets. As the UK asserts its economic independence post Brexit, ensuring we are the location of choice for business is too important an opportunity to miss. 

We echo the concern that there is a heightened risk the holistic reform of corporate governance, reporting and audit will not be achieved in the absence of legislation, at least not in a co-ordinated or timely manner. Nevertheless, even if there is no mention in next week’s Queen’s Speech, it is imperative that the ambition is not lost. There will be scope to introduce many of the key governance requirements by way of the UK Corporate Governance Code, and changes in corporate reporting and audit regulation are already being embraced by business and the profession. The regulator, business and the accountancy profession may instead need to take up the challenge of working together to develop and adopt relevant and proportionate measures to promote good corporate governance and reporting. We appear to be in agreement that we have been talking about this issue for too long.  

Yours sincerely,

Andrew Harding, FCMA, CGMA
Chief Executive — Management Accounting
The Chartered Institute of Management Accountants, part of the Association of International Certified Professional Accountants