On 20 January 2026, UK ministers decided to drop the long-delayed Audit Reform Bill. The decision comes after years of anticipation following high-profile corporate failures with companies such as Patisserie Valerie.
In previous years, there had been discussions of replacing the Financial Reporting Council (FRC) with a new Audit, Reporting and Governance Authority (ARGA) – a move that would have increased regulatory oversight and compliance obligations for large companies.
Why was Audit Reform introduced?
The Audit Reform Bill was first developed in response to major corporate collapses that exposed serious weaknesses in audit quality, corporate governance, and regulatory oversight. It aimed to strengthen audit quality to avoid businesses failing.
Why was Audit Reform dropped?
The reforms would create significant costs for large companies which is something the government wants to avoid during a period of economic uncertainty.
What does this mean for businesses?
There will be no immediate changes to audit or corporate reporting capabilities, but it will benefit those larger corporations as they will no longer face increased compliance costs and increased scrutiny. This will reduce pressure on businesses and encourage concentration on other areas such as growth and innovation.
However, the decision could raise concerns about audit quality and corporate oversight. Without reform, there may be less pressure to improve standards, which could increase the risk of future corporate failures.
What should businesses do next?
Even though the bill has been dropped, businesses should still consider strengthening their audit and governance practices proactively. Things such as strengthening internal controls and audit processes, improving transparency in reporting can ensure your business remains compliant and resilient. For now, focus should be on improving governance and audit quality internally rather than waiting for any future legislative changes.
Get in touch
If you’d like to discuss what the decision to drop the Audit Reform Bill means for your business, our expert team is here to help. We can guide you through the regulatory landscape, review your current audit and governance arrangements, and advise on the best next steps for your organisation. Please contact Chris Read using the button below.
