Technical Updates Q1 2021
Corporate governance reform in the UK
In the wake of recent accounting scandals, the UK government is expected to publish long awaited details of proposed amendments to corporate governance and audit oversight. Changes are expected to be similar to the requirements introduced by the Sarbanes-Oxley legislation in the US following the collapse of Enron. Notably, company directors are expected to be made personally liable over the accuracy of their financial statements.
There have been long-running concerns around potential conflicts of interest between advisory and audit, and the UK government has publicly backed the operational separation of audit and advisory divisions within the Big Four.
Reforms to enhance the reliability of financial information will be welcomed by many, including pension trustees. However, onerous reporting obligations may increase costs at a time when companies are already struggling. Striking a balance will be a key consideration for policymakers in the months ahead.
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