Newsflash - Government decides not to proceed with the audit reform bill – January 2026

On 20 January, the Department for Business and Trade (DBT) announced, as part of a wider statement promoting growth and removing red tape for businesses, that ministers have taken the decision not to proceed with the wider package of audit and corporate governance reforms. This would have included broadening the definition of public interest entity and a new accountability and enforcement regime for directors.

A letter sent to the DBT Committee by the Minister for Small Businesses and Economic Transformation indicates this is part of the Government’s focus on reducing administrative burdens on business and that the Government is “scrapping it to avoid significant new costs”. The priority for DBT is now the upcoming Modernising Corporate Reporting consultation, which is expected to be wide-ranging.

In relation to the future of the Financial Reporting Council (FRC), the letter also states that the government will press ahead with putting the FRC on “a proper statutory footing as soon as Parliamentary time allows”. Our current understanding is that this “statutory footing” relates to funding and access to information rather than any further powers.

In response to the letter, the Chair of the DBT committee, Liam Byrne, raised concerns that government is risking putting deregulation ahead of accountability.

In addition, the CMA has issued a Strategic review of CMA markets remedies and is reviewing which of these remedies can be updated or removed. The list of remedies being considered includes the Statutory Audit Services Order 2014 which was the original source of requirements for mandatory audit tenders every ten years for FTSE 350 companies in the UK. However, following the EU Statutory Audit Directive being adopted into UK law in 2016, these requirements are mandatory for all public interest entities under the Companies Act 2006 and the outcome of this CMA consultation would not impact those statutory requirements.