These are Lancashire small businesses’ hopes for Government’s audit regime shake-up

The national chairman of the Lancashire-based Federation of Small Businesses, Martin McTague, said it was vital that late payment culture was tackled in the shake-up.

He said: “It’s good to see BEIS grasping the nettle on audit reform. As legislation is drawn up, the key to success will be making corporate Audit Committees directly responsible for reporting on payment and wider supply chain practice.

“When we were the first group to flag the ramping up of unreasonable payment terms at Carillion, six months before the company collapsed, nothing was done.

“In order for today’s measures to work, there must be inclusion of payment practices within Audit Committees’ remits. This reform would ensure a whole board awareness of payment practices. Without it, there will be more Carillions.

“Improving transparency at big corporates whilst easing unnecessary reporting burdens for small businesses is the right direction of travel.

“It’s now a case of making sure the resulting Bill is fit for purpose as the legislative vehicle needed to make a real difference. We look forward to working with the Business Secretary Kwasi Kwarteng to ensure it does.”

The Government said the reforms aim to improve the audit regime and corporate transparency to help prevent sudden large-scale collapses like Carillion and BHS, which hit countless small businesses and led to job losses.

It added that the Financial Reporting Council will be replaced by a stronger regulator, the Audit, Reporting and Governance Authority.

For the first time, the largest private companies, not just stock exchange listed firms, will come under the scope of the regulator.