{"id":536460,"date":"2026-01-20T12:45:06","date_gmt":"2026-01-20T12:45:06","guid":{"rendered":"https:\/\/www.constructionnews.co.uk\/?p=536460"},"modified":"2026-01-20T16:48:00","modified_gmt":"2026-01-20T16:48:00","slug":"construction-auditors-have-to-raise-their-game-despite-government-u-turn-on-reforms","status":"publish","type":"post","link":"https:\/\/www.constructionnews.co.uk\/financial\/construction-auditors-have-to-raise-their-game-despite-government-u-turn-on-reforms-20-01-2026\/","title":{"rendered":"Contractors to escape audit reform after legislation U-turn"},"content":{"rendered":"

The government has scrapped reforms intended to tighten audit processes for large firms.<\/p>\n

On Monday (19 January), small businesses minister Blair McDougall announced the government had \u201creached the difficult decision\u201d not to proceed with the reforms, which were first proposed after high-profile business collapses such as major contractor Carillion<\/a>.<\/p>\n

The reforms would have tightened financial scrutiny and accountability for large companies \u2013 including major construction groups \u2013 without fundamentally changing how audits are done for smaller firms.<\/p>\n

\u201cA great deal of progress has been made since the collapse of Carillion in 2018,\u201d McDougall said in a letter to Liam Byrne, chair of the House of Commons business and trade committee.<\/p>\n

\u201cWe have seen considerable improvement in the quality of audit regulation, and of audit itself.\u201d<\/p>\n

He added that the U-turn on reforms would \u201cprevent significant new costs for large businesses\u201d, and noted that the government\u2019s \u201cambitious legislative programme\u201d left little parliamentary time to see the policy through.<\/p>\n

\u201cNevertheless, it remains important to have effective, proportionate regulation of audit and a regulator [the Financial Reporting Council \u2013 FRC] that has the right legislative set-up to do the job,\u201d McDougall said.<\/p>\n

However, accountancy experts and other financial analysts were unimpressed by the scrapping of the reforms.<\/p>\n

Alan Vallance, chief executive of the Institute of Chartered Accountants in England and Wales, told CN<\/em>: \u201cWe cannot hide our disappointment that eight years since the collapse of Carillion and after many false dawns, the government has decided to scrap the audit and corporate governance bill.<\/p>\n

\u201cThe government had itself recognised that an audit reform bill would increase global investor confidence in UK companies and boost the prospects of growth.\u201d<\/p>\n

Vallance acknowledged \u201cchanges the profession has made\u201d to tighten audit quality and governance since 2018.<\/p>\n

But he urged the government to provide the FRC with \u201call the tools it needs to do the job\u201d as\u00a0\u201cthe final piece in the puzzle\u201d.<\/p>\n

Chris Davies, managing director of DRS Bond Management acknowledged that auditors\u2019 assessments of contractors\u2019 work in progress had become \u201cmore transparent\u201d, but he added: \u201cThere\u2019s a saying in construction: \u2018lies, damned lies and work in progress\u2019.\u201d<\/p>\n

\u201cAuditors are well remunerated but too often they do a perfunctory job and allow themselves to be browbeaten too often [by companies they\u2019re auditing],\u201d Davies said .<\/p>\n

\u201cIt\u2019s a perennial problem \u2013 auditors are just not particularly good at their job and need to raise their game,\u201d he told Construction News<\/em>.<\/p>\n","protected":false},"excerpt":{"rendered":"

The government has scrapped reforms intended to tighten audit processes for large firms. On Monday (19 January), small businesses minister Blair McDougall announced the government had \u201creached the difficult decision\u201d not to proceed with the reforms, which were first proposed after high-profile business collapses such as major contractor Carillion. The reforms would have tightened financial …<\/p>\n","protected":false},"author":135716,"featured_media":509854,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ep_exclude_from_search":false,"footnotes":""},"categories":[552,565],"tags":[],"class_list":["post-536460","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financial","category-government"],"yoast_head":"\nContractors to escape audit reform after legislation U-turn | Construction News<\/title>\n<meta name=\"description\" content=\"The government has scrapped reforms intended to tighten audit processes for large firms. 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