Many business owners who need an audit will be familiar with the long-running talk of reform.
Plans have been floated for years, with most not resulting in meaningful change to the ways that audits are conducted.
However, there is an indication that some changes may finally be on the horizon, so it is worth understanding what could be coming soon and how it might affect your business.
You may recall that reform talk has centred on replacing the Financial Reporting Council (FRC) with a new Audit, Reporting and Governance Authority (ARGA), which was a proposal first announced back in 2019.
Yet ARGA’s arrival remains in limbo with no clear indication as to whether the transformation will ever become a reality.
Instead, the FRC has launched a public consultation aimed at pinning down the practical problems that have been known to cause frustration among those who face audits as they consider alternative ways to improve enforcement and learning across the profession.
The current binary approach to the way that audits are resolved is no longer believed to be the most effective way of approaching it.
Currently, the choice exists between a private, constructive engagement or a full-blown investigation, and the FRC wants to expand the range of options available to auditors in the hopes of benefiting businesses as well.
The FRC describes three potential routes that would clarify how issues are resolved:
The aim is to give regulators more proportional, nimble options, reserving lengthy investigations for the most serious matters of public interest while using swifter interventions where appropriate.
For businesses, that could be a welcome change as drawn-out probes can be disruptive, costly and highly stressful, so a clearer spectrum of responses may reduce the burden on firms caught up in enforcement action.
Nothing is set in stone yet, which is why it is important that businesses become aware that the public consultation is ongoing.
The FRC’s consultation closes on 9 January 2026 and it has signalled that, subject to the consultation and follow-up work, a revised Audit Enforcement Procedure could take effect from 1 July 2026.
If you have views on how audits are handled, now is the moment to make them known.
Even if you don’t plan on submitting formal comments, the consultation is a timely prompt to review your own audit readiness.
If you are unhappy with current audit practices or have encountered delays, poor communication or questions about the quality of reviews, now is the time to raise those points in the consultation.
The aim is to make a better audit system that works for everyone and you can be a part of shaping that.
If you expect an audit in the year ahead, start preparing now so that you can avoid even minor delays that come from an inefficient audit process.
You should gather supporting documents, check that previous audit recommendations have been actioned and ensure your books and governance papers are in order to make your audit as smooth as it can possibly be.
Being proactive reduces the chance that routine issues escalate into regulatory attention, so you may not need to worry about the issue that is at the centre of the reforms.
We can assist you in getting audit-ready and in responding to any findings quickly and effectively.
Our team can review your current processes, help you compile the documentation auditors will ask for and support you in implementing any recommendations that arise.
We will also keep you updated on the consultation outcomes and any implementation timetable of audit reforms.
ARGA may never appear, but it is still important to keep up with changes to audits.
