The government proposes to give the regulator powers to gather information and carry out investigations to establish whether a director has breached a relevant requirement, and to impose sanctions in cases where a breach is found to have occurred.

the duty to provide a statement as to disclosure to auditors and to provide information or explanations at the request of the auditor.

the duty to approve the directors’ report and.

the duty to approve and sign the annual accounts.

the duty to approve accounts only if they give a true and fair view.

the duty to keep adequate accounting records.

The Government’s intention is that the regulator’s new enforcement powers will apply to breaches by directors of the existing statutory duties relating to corporate reporting and company audits. All directors of companies which are public interest entities will be in scope, which is a broader approach than initially proposed, when only the CEO, chief financial officer, chair and chair of the audit committee would be covered by the new rules. The government plans to legislate to provide ARGA with the necessary powers to investigate and sanction breaches of corporate reporting and audit-related responsibilities by PIE directors. It also sets out proposals for the regulator to have responsibility for deciding which individuals and firms should be approved to audit PIEs. The government is also proposing to give the regulator competition powers and new powers to strengthen its corporate reporting review function, its oversight of audit committees and to enforce the corporate reporting duties of directors. The regulator will be accountable to parliament, with strategic direction from the government. It will be governed by a simplified board with strengthened oversight, and non-executive members including the chair will be public appointments.

It will also have two operational objectives, on quality and competition, and several regulatory principles set out in legislation.

Its general objective will be to protect and promote the interests of investors, other users of corporate reporting, and the wider public interest. They include new statutory objectives and functions along with a new statutory levy to replace the existing voluntary levy.ĪRGA will be established as a company limited by guarantee. The consultation document sets out the steps that the government proposes to give ARGA the formal duties, functions and powers it needs to be fully effective. The proposals would give the new audit regulator, the ARGA greater oversight and stronger powers to enforce standards and break up the dominance of the Big Four audit firms – PwC, Deloitte, EY and KPMG – which audit the overwhelming majority of FTSE 350 listed businesses, currently handling 97% of these listed audits.

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