ICAS calls for regulator name change

ICAS has responded to the initial BEIS consultation on the first wave of proposed reforms to the Financial Reporting Council (FRC).

The Independent Review suggested that the new regulator should be called the Audit, Reporting and Governance Authority (ARGA).

ICAS has proposed two possible alternatives that more accurately reflects the sequencing of corporate governance, corporate reporting and audit, for BEIS to consider. The Governance, Reporting and Audit Authority (GRAA), or the Authority for Governance, Reporting and Audit (AGRA).

In its response to BEIS, ICAS says it has called for the name of the new regulatory body to reflect the role that each component part plays in the corporate reporting eco-system. Audit is not the primary component of this system, nor is it the most important.

The name ARGA places audit, reporting and governance in the wrong sequence, and distorts the natural order of the framework. This might seem like a subtle point to make against the background of all the other regulatory reforms facing our profession, but ICAS firmly believes it is an important one and is in the public interest.

The proposed name of ARGA may exacerbate the expectation gap.

Many of the other key recommendations of the Independent Review will require more detailed consultations.

ICAS welcome the BEIS proposal to consult separately on the future of PIE regulation, enforcement and funding.  ICAS consider that these issues will require more careful consideration.

Moreover, it will be important for BEIS to consider some of the recommendations alongside whatever it decides in relation to the Competition and Market Authority’s recent proposals and those from the current Brydon Review, to ensure that they are complementary, and to minimise unintended consequences.

Michelle Mullen, executive director, standards at ICAS, said: “ICAS welcomes many of the reforms which have been proposed for the future regulation of corporate governance, corporate reporting and audit.

“We stand ready to support the implementation of the reforms, and the transition to the new regulator.

“For now, we would encourage some reflection on what it’s going to be called. The name of this new regulator is quite important.”