The government’s retreat from Carillion audit reforms is feeble | Nils Pratley
The wait for the “long-awaited” government bill to reform the audit market is over.It is not because ministers have decided it’s embarrassing that eight years have passed since the collapse of Carillion, the massive corporate failure that reminded everybody that auditing is boring until it matters greatly that outsiders can trust the published numbers.Rather, it is because the government has given up on a reform bill.It would rather give another airing of its “pro-growth” refrain.“While the planned reforms would be beneficial, some would increase costs on business, and it would not be right to prioritise these over more deregulatory measures,” the minister for small business, Blair McDougall, formally told the business select committee.
He had other explanations – not enough parliamentary time and “the need for major reform is less pressing than it was” – but all can be regarded as a case of short memory syndrome.Back in 2018, the chaotic collapse of Carillion, one of the country’s biggest construction and contracting firms, prompted near-universal agreement that the quality of audit in the UK, and audit regulation, was overdue for a major upgrade.Almost 3,000 employees lost their jobs and, since the company was up to its neck in contracts to service schools and hospitals, the government had to spend £150m to maintain basic services.The shocking detail was that it took just six months from Carillion’s first profits warning to full calamity.At the end, liabilities were about £7bn and cash just £29m.
KMPG, as auditor, copped a record fine from the audit watchdog, the Financial Reporting Council (FRC), and the fallout continues, with two ex-Carillion directors being fined by the Financial Conduct Authority as recently as this month.But, back in 2018 the whole saga was viewed as so serious that a new regulator was needed, armed with stiffer powers and a broader remit, as recommended by the City grandee Sir John Kingman in a review for government.A white paper was issued in 2021 but a bill never made it on to the legislative agenda of the Brexit-consumed last Tory government.Now it won’t appear under Labour either.The best that can be said in the government’s defence is that it is correct that the FRC, after a clear-out of old management, upped its game in subsequent years.
The club looks less cosy now that the big four have separated their audit and advisory arms,But the biggest flaw was always the FRC’s lack of statutory status to guarantee its annual funding and its powers to summon witnesses,If the FRC is being retained, rather than replaced, will it at least be put on statutory footing as a matter of absolute urgency? “As soon as parliamentary time allows,” is the government’s weak promise,But there seems to be no intention even to try to resuscitate other elements that were previously viewed as vital,One was the proposal to bring the largest private companies into a tighter regulatory auditing system (the BHS failure happened at roughly the same time as Carillion’s).
A second was the plan to give the regulator powers to hold to account directors who are not members of accounting bodies,If the government regards those proposals as inessential pieces of regulatory flummery, it should rethink,Private companies are getting bigger all the time and the FRC, not just the FCA, should be able to go after all directors in cases like Carillion,A generation ago, in 2001, the US had its “Enron moment”, the bankruptcy of a major energy company amid an accounting scandal,Within a year, it had passed the Sarbanes-Oxley Act, which rearmed regulators and created criminal penalties for corporate misreporting.
In the UK, the “Carillion moment” of 2018 has been met with eight years of ineffectual fiddling by successive governments that will result, maybe, in the bare-minimum requirement of statutory powers for the regulator being tacked on to some other financial bill.This does not feel like dynamism in action.
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Barbecues, ballboys and oranges: Australia tennis greats pass ‘strong tradition’ to next generation | Simon Cambers
Each year on the first Friday of Wimbledon, an increasingly large crowd flocks to a house near the All England Club for a very special party. Hosted by Tennis Australia, the “Aussie Barbecue” has become a fixture in the calendar, a celebration of tennis for current players, former stars, coaches, administrators and journalists.The food and drinks are outstanding and even when the weather doesn’t play ball, a huge marquee protects the guests. But in addition to the fun, the evening also plays an important role, maintaining a link between generations of Australian tennis.Australia is, of course, blessed with a rich heritage of champions
‘We played to 8,000 Mexicans who knew every word’: how the Whitest Boy Alive conquered the world
He lit up Europe with bands ranging from Peachfuzz to Kings of Convenience. But it was the Whitest Boy Alive that sent Erlend Øye stratospheric. As they return, the soft-singing, country-hopping sensation looks backIf you were to imagine the recent evolution of music in Europe as a series of scenes from a Where’s Wally?-style puzzle book, one bespectacled, lanky figure would pop up on almost every page. There he is in mid-90s London, handing out flyers for his first band Peachfuzz. Here he is in NME at the dawn of the new millennium, fronting folk duo Kings of Convenience and spearheading the new acoustic movement
Sally Tallant appointed as new director of London’s Hayward Gallery
Sally Tallant, the former boss of the Liverpool Biennial, has been announced as the new director of the Hayward Gallery and visual arts at London’s Southbank Centre.Tallant, who is currently in charge of the Queens Museum in New York, will return to the UK to take over from Ralph Rugoff, who will step down after two decades in charge of the institution, which celebrates its 75th anniversary this year.The Leeds-born Tallant has been in the US since 2019 after an eight-year stint in charge of the Liverpool Biennial and more than a decade working at the Serpentine Gallery, where she was head of programmes until 2011.She said she was delighted to be returning to London and excited to build on the “outstanding legacy” of Rugoff, who also took charge of the Venice Biennale in 2019. She said she was looking forward to “shaping the next chapter of this vital cultural destination and civic institution”
Australian shares shoot up after Trump walks back tariff threat
Australian shares shot higher on Thursday to recoup part of their recent losses, after Donald Trump dropped a tariff threat used against European allies amid his pressure campaign to gain control of Greenland.The de-escalation fuelled a rally in global share markets that flowed into Australia, sending the benchmark S&P/ASX 200 briefly above the 8,860 point mark, before a slight easing.The US president’s retreat once again rewarded dip buyers, who have ridden the “Trump Always Chickens Out” (Taco) trade strategy that relies on the American leader backing down from tariff threats after declaring victory.Trump has said he has a “framework of a future deal” on Greenland, without elaborating.But, in an interview with Sky News on Wednesday, a member of Denmark’s parliament, Sascha Faxe, has suggested that the deal Donald Trump claims to have struck with Nato over Greenland is “not real”
Elon Musk floats idea of buying Ryanair after calling CEO ‘an idiot’
Elon Musk has floated the idea of buying the budget airline Ryanair, escalating his public spat with the Irish carrier’s boss, Michael O’Leary.The two outspoken businessmen have locked horns since last week, when O’Leary was asked whether he would follow Lufthansa and British Airways in installing Musk’s Starlink satellite internet technology on his fleet of 650 aircraft.The Ryanair chief executive rejected the idea, saying that adding antennas to the jets would result in “2% fuel drag”, adding an extra $200m-$250m to its $5bn (£3.71bn) annual kerosene bill.Musk said that interpretation was “misinformed” in a post on his X platform, prompting a tit-for-tat exchange of insults, with each calling the other an “idiot” and then the Tesla and SpaceX CEO saying O’Leary should be fired
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