MPs and peers are urging the prime minister to speed up heavily delayed reforms to the accounting industry to stave off further high-profile corporate collapses.
A cross-party group of politicians, including Dame Margaret Hodge, has written to Rishi Sunak asking him to commit to audit reform by the end of this parliament by including it in the King’s Speech on November 7.
The government said that it would overhaul the audit industry after the collapse of the outsourcer Carillion in 2018, which delayed the construction of schools and hospitals and cost taxpayers an estimated £148 million.
The Financial Reporting Council (FRC), the industry regulator, fined the Big Four accounting firm KPMG a record £21 million this month over “textbook errors” in its audit of Carillion.
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Ministers committed themselves to drafting rules on audit reform earlier this year, but the Financial Times has reported that the government may delay the changes until after a general election.
The cross-party group called this weekend for “urgent” action. “We are deeply concerned about the pace of reform. Not least because during this time we have seen further corporate collapses marked by audit weaknesses, including Patisserie Valerie, Thomas Cook and in recent weeks Wilko,” the letter to Sunak read.
Anne Kiem, chief executive of the Chartered Institute of Internal Auditors, said: “It is vital this bill is voted on in the next parliamentary session and that the government don’t kick the can down the road until after the election.”
The FRC found that about a quarter of the major audits it inspected required improvement in its last annual report on the sector. The regulator itself is supposed to be replaced by a new body called the Audit, Reporting and Governance Authority, but no date has been set.
Catherine Burnet, KPMG’s head of audit, told The Sunday Times earlier this month that the company had changed. “We cannot defend the work that we did on Carillion,” she said.
Insurer cuts funding target in float
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An insurance firm gearing up to list on the London Stock Exchange is planning to cut the amount it raises from investors amid continued market uncertainty, writes Jill Treanor.
London Innovation Underwriters had intended to seek £500 million from investors, but is thought to be scaling that back to between £150 million and £300 million. It is merging with a special-purpose acquisition company (Spac), Financial Acquisitions Corp, which was listed in 2022. Spacs are cash shells designed to be used to facilitate market listings for other companies quickly.
The firm plans to offer investors access to the Lloyd’s of London market by building a portfolio of specialist insurance products.
It is one of the few to list in London this year and is expected to proceed with its deal this week despite the uncertainty in the markets caused by high inflation and geopolitical tensions. Sources said the lower fundraising is due not to a lack of investor demand but the rapid timetable required to deploy funds in the Lloyd’s market for the coming financial year.
Private investors will be able to participate in the deal through the PrimaryBid platform. It represents a rare opportunity for investors to gain access to Lloyd’s, which operates through syndicates that provide insurance for a wide range of risks, such as cyber-crime and climate.
