Fury over delays to accounting shake-up: MPs hit out a year after Thomas Cook collapse
MPs have slammed the Government for ‘dragging its feet’ on audit reforms and bringing in a new accounting industry regulator.
Parliament’s business committee pressed ministers to make a series of urgent changes to corporate rules in the wake of the Thomas Cook collapse.
These included reining in bonus schemes, setting provisions to ‘claw back’ payouts if a company goes bust and standardising certain accounting practices.
Shake-up: Parliament’s business committee pressed ministers to make a series of urgent changes to corporate rules in the wake of the Thomas Cook collapse
MPs also pushed the Government to replace the Financial Reporting Council with a beefed-up regulator, the Audit, Reporting and Governance Authority (ARGA) as soon as possible.
But ministers have refused to give any timetable for the new ARGA – saying only that it will be brought in ‘as soon as Parliamentary time allows’.
MPs have hit back at the delay, warning that the financial turmoil companies are suffering in the wake of the coronavirus crisis makes it more important than ever to ensure people trust the audit profession and it is being held to high standards.
Auditors have been under the microscope since the collapse of contractor Carillion in January 2018 after it was given a clean bill of health by KPMG just months before it collapsed.
More recently the astonishing accounting fraud at Wirecard – in which £1.7billion was discovered to be missing from its books – and Thomas Cook’s shock collapse last year have piled even more scrutiny onto accountants.
Last week Business Secretary Alok Sharma failed to give a date for when legislation to trigger audit reform would be introduced.
Three reports have looked into how the profession could be improved, the most recent overseen by former London Stock Exchange head Sir Donald Brydon submitted in December.
Darren Jones, chairman of the committee, said: ‘Recent audit scandals highlight the need for the Government to tackle this issue as a matter of urgency.
‘At a time when businesses are facing tough trading conditions and when their balance sheets are under significant pressure, it’s important investors and other stakeholders can have confidence in audits.’
Thomas Cook went bust last September after it was unable to secure a £200million lifeline from its bankers and the Government refused to step in to help.
Questions were raised after it emerged high-flying bosses creamed off £47million in pay and perks in the years before it folded – despite being in dire financial straits towards the end.