Audit reform plans must result in right legislation, say FSB

  • 31 May 2022

Plans for new business regulation in the UK

The UK Government has announced plans for a new regulator to reduce the risk of big company collapses - and will update the definition of micro-enterprises. 

Business Secretary Kwasi Kwarteng wants to introduce plans that would bring greater accountability for big business, and help prevent sudden large-scale collapses like Carillion and BHS, which hurt countless small businesses and led to job losses.

The UK Government also announced that it will review wider reporting burdens on large and small businesses, including those from retained EU law.

The Government has said it will update the definition of micro-enterprises. This EU threshold could be forcing too many of Britain’s smallest businesses to spend time and money preparing accounts to a level of detail only needed for larger companies.

Federation of Small Businesses (FSB) National Chair Martin McTague said: “It’s good to see BEIS grasping the nettle on audit reform. As legislation is drawn up, the key to success will be making corporate Audit Committees directly responsible for reporting on payment and wider supply chain practice.

“When we were the first group to flag the ramping up of unreasonable payment terms at Carillion, six months before the company collapsed, nothing was done.

“In order for today’s measures to work, there must be inclusion of payment practices within Audit Committees’ remits. This reform would ensure a whole board awareness of payment practices. Without it, there will be more Carillions.

“Improving transparency at big corporates whilst easing unnecessary reporting burdens for small businesses is the right direction of travel.  

“It’s now a case of making sure the resulting Bill is fit for purpose as the legislative vehicle needed to make a real difference to late payments. We look forward to working with the Business Secretary Kwasi Kwarteng to ensure it does.”

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