Whilst we haven’t yet had legislative clarity from the government on the form that any new requirements on UK SOx and internal controls will take after last year’s consultation on audit and corporate governance reform, it is clear that change is coming.
The government’s response is expected to be released sometime in May, however we expect that the proposed reforms will remain in legislative review by Parliament before being enacted into law later in 2022.
It is now considered unlikely that the original whitepaper proposals relating to internal controls will see the UK following in the footsteps of the United States in enacting SOx internal controls requirements into law.
However, the FRC has published plans to create a new regulatory body, known as ARGA, (Audit, Governance and Reporting Authority) by April 2023. It is possible that in lieu of primary legislation being passed, ARGA will instead take the lead on raising the bar on internal controls. By investing in readiness initiatives and taking early steps in the right direction, such as performing health-checks on existing accounting policies and processes, companies have the opportunity to ensure they are prepared for any changes when they arrive.
KPMG UK’s Accounting Advisory Services (AAS) has released the following article which outlines 5 key questions to help companies get prepared for improving the strength of their accounting policies and processes.