Audit firms 'must deal with Companies Act reform'

Professionals working in the audit sector will be aware of the changes planned to the Companies Act, with reports from October 1st expected to provide information about a firm's human rights approach, gender representation and greenhouse gas emissions.

This may be a worthy attempt to improve attitudes in the corporate sector and help businesses develop greater levels of social responsibility, but it will also mean more work for audit professionals responsible for collating this data.

Paul Holland, director in the sustainability advisory services team at KPMG in the UK, told Accountancy Age that many companies are woefully under-prepared for this change because they do not currently report this information and have not put the correct processes in place for collating and analysing it.

"We expect audit committees to be raising this and asking what plans the companies have in place to ensure compliance. We are expecting a rush of calls now that the regulations have been laid before parliament," he added.

The reforms also hope to produce a fairer, better-rounded picture of UK firms, something that has been highlighted as especially important since the financial crisis revealed that audits may have been insufficiently detailed.

It is intended to help companies 'tell their story' better, with business models, ongoing strategies, principle risks and so on all highlighted. Furthermore, some reporting requirements have been excised in the hope that the overall red tape burden on audit professionals and UK firms is not excessive.

Business minister Jo Swinson explained that full and open accounts are crucial for shareholders and help them get a clear idea of how a firm is performing and developing, adding that the process through which they are produced must be clear and transparent.

The government hopes this attitude of honesty and disclosure will become embedded throughout the UK business community as part of this new scheme.

http://www.accountancyage.com/aa/analysis/2275009/audit-committees-need-to-get-cracking-on-companies-act-reform