If you were listening to Prince Charles read the Queen’s speech, it’s possible that you missed mention of audit and corporate governance. Here’s an extract of the key messages on the reform:
“The government will prepare and publish a draft Bill to revamp the UK’s audit and corporate reporting regime.
We will rebuild trust in the UK’s audit, corporate reporting and corporate governance system by creating a strong new statutory regulator, tackling the dominance of the Big Four audit firms and making directors of big companies more accountable.”
What’s clear from the Government’s announcement is that the proposed changes, originally set out back in March last year, aren’t going away and organisations need to start preparing for what is coming. What that’s going to look like should be made clearer when the Government releases its official response to the ‘Restoring trust in audit and corporate governance’ whitepaper, which is expected shortly.
What should you do now?
In the meantime, with so little detail provided you’re probably asking yourself, what should we do now? What do we do about our internal controls environment, and how far should we go?
From what we’ve seen in the market, your next steps depend on where you are in transforming your controls environment.
If you have a transformation programme in flight, the recent announcements provide reassurance that you should continue with it. In fact, we’ve seen some organisations opting to accelerate their finance transformation programmes through internal controls.
If you haven’t started a programme and are waiting for further detail from the government, our advice remains that you should kick off ‘no-regret’ actions. Below are some things for you to consider:
Think through the cultural shift
Wherever you are in your transformation, don’t forget to factor in the cultural change required. Understanding the impact your programme will have on the people in your organisational culture and building a clear change story and training to support is critical to the success of your transformation. We shared our thoughts on why you need to bring people on your UK SOx journey, and how to do that in our blog post, UK SOx: People and culture.
Understand your current landscape
If you’re starting out on your journey, you need to first gain an understanding of the scope of the change for your organisation by assessing your existing processes and creating a clear plan for success. Bear in mind that even in the best of times the implementation timeline for a full-scale controls transformation (and by this we mean the sort of programme that you would need to achieve SOx or similar compliance) is 18-24 months. The sooner you get started, the more time you’ll have to transform and ensure that the change is sustainable over the long term.
We identified five actions that every organisation can take to reap the benefits associated with internal control implementations in our blog post, UK SOx – Where do we start?
Corporate governance reform is coming. If you want to be on top of it and benefit from your transformation, don’t delay getting started.