Is an audit reformation finally happening? Have your say before it’s too late!
Most business owners who are required to get an audit will likely be aware that there have been plans to reform the way that audits work for many years.
These plans keep stalling and being delayed with new promises made and very little changing.
There is a glimmer of potential that something might be about to change so it is time for business owners to take stock of how they prepare for audits and what they may need to do in the future.
What are the proposed changes to audits?
Given that it was announced back in 2019, you might expect the proposed changes to centre on the introduction of the Audit, Reporting and Governance Authority (ARGA) and the abolishment of the Financial Reporting Council (FRC).
Unfortunately, there is still no word on whether ARGA will ever be introduced, as it is still indefinitely delayed.
Instead, the FRC have now opened a public consultation to try to identify the ongoing and current issues that are afflicting the way that audits are conducted.
There is an implication with this public consultation that ARGA might not be manifesting in the manner that was previously suggested and that a fresh approach to audit reform is being sought.
The public consultation centres on a desire to make audits more agile and versatile so that swifter, more proportionate action can be taken in appropriate cases, while full investigations are reserved for matters that meet a higher threshold of public interest and seriousness.
At the heart of the proposals is a move away from the binary choice the FRC currently faces between private constructive engagement and a full investigation.
The aim is to move towards a graduated set of options.
The consultation describes three new routes that would better clarify how resolutions are achieved.
The first is a published constructive engagement option that would allow certain regulatory interventions to be made public to support wider learning across the profession.
The second is an accelerated procedure for matters where there is clear evidence or an admission of failings.
The third is an early-admissions process in which firms carry out reviews under FRC oversight and accept responsibility for failings in return for a more expedited resolution.
Those changes are intended to give the regulator more nuanced ways to resolve matters without always resorting to lengthy investigations.
This could be seen as a positive for businesses that struggle to face the lengthy investigations that audits can sometimes bring about, as the FRC seek to remove these entirely.
What should businesses do in preparation for the audit reforms?
The main reason we are bringing this to your attention is because you get to be part of the process.
The FRC is asking for responses by 9 January 2026 and it has signalled that, subject to consultation outcomes and supporting implementation work, the revised Audit Enforcement Procedure would take effect from 1 July 2026.
Be sure to respond to the consultation before the deadline to have your say.
If you have any ongoing frustrations with the current way in which audits are conducted and handled, then now is the time to voice these grievances.
It can be constructive to be engaged with the process to ensure that you are more informed about the reforms before they take place.
Even if you have no strong opinions about the way that audit resolutions are handled, it is still an incentive to reflect on your own approach to auditing.
If you are likely to need an audit in the next year, then now is the time to begin preparing.
Gather up any information that will be helpful to an auditor and review previous audits to ensure that all actions have been taken to address previous findings.
We can help you review your current practices to ensure that your finances are audit-ready and can help you enact the recommendations of an auditor once they have been made.
We will also work to keep you up to date on any reforms to audits as and when they happen, even if ARGA never comes to pass.
To ensure you are fully prepared for audits, regardless of how they might change, speak to our team today!
