The British accounting profession not only is facing Brexit, but also a reconfiguration of its regulator. UK accountants who practice in European Economic Area (EEA) countries are being warned that without a Brexit deal they will need to contact the “competent authority” in that country to see if their UK qualifications will continue to be recognized, and they may have to re-establish their eligibility by completing a new aptitude test or adaptation period, or to requalify for a relevant credential. Audit firms are also being warned they may need to resign as auditors in EEA countries if no practical steps are available to allow their audit opinion to be valid there.

Simon Dingemans has been appointed the next chair of the United Kingdom’s Financial Reporting Council (FRC), which is in the process of becoming a new enhanced regulator to be called the Audit, Reporting and Governance Authority (ARGA). He is to take up his position in the autumn. Formerly chief financial officer of GlaxoSmithKline plc, Mr. Dingemans said: “I am delighted to have been given the opportunity to lead this important process to reform the FRC and establish the ARGA as a very different regulator for the future, one that will bring more challenge, transparency and forward thinking. I also intend the ARGA to be at the forefront of driving the reforms we need to rebuild confidence in the audit market and the reporting governance standards that underpin trust in UK business.”

A few days earlier than the announcement of Mr. Dingemans’ appointment, the FRC issued a consultation proposing important changes to the UK’s Ethical and Auditing Standards. These include a stronger “objective, reasonable and informed third party test,” enhanced authority of the ethics partner function within audit firms, and a shorter list of permitted services that auditors of public interest entities can provide to audited bodies.

The FRC’s current chief executive, Stephen Haddrill, said: “Recent corporate failures and the FRC’s own enforcement work has shown that Standards need to be strengthened. Our audit inspections and enforcement activity continue to identify a lack of professional skepticism and independence as being key points of failure when things go wrong. The UK will only continue to attract high-quality global investment if investors have confidence in the independence of auditors and the means to have a better understanding of the critical judgements those auditors make. Our changes will strengthen and clarify ethical requirements in the public interest.”

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