Audit regulator shakes up leadership team
8 Oct 2019
The Financial Reporting Council (FRC) has overhauled its leadership team with the appointment of Simon Dingemans and Sir Jon Thompson as chair and chief executive
8 Oct 2019
The two senior executives join the audit regulator at a critical point as the FRC transitions to its new regulator status as the Audit, Reporting and Governance Authority (ARGA), following Sir John Kingman’s independent review.
The audit regulator is under huge pressure to tighten up controls on the UK audit market, following a series of damning audit investigations of Big Four firms, which have led to multimillion pound fines over audit performance at major listed companies.
Sir Jon Thompson, former head of HMRC, takes over as chief executive, replacing Stephen Haddrill who was at the FRC for nine years.
Incoming chair, Simon Dingemans, was previously chief financial officer of GlaxoSmithKline, and replaces Sir Win Bischoff who has stepped down as chair after six years in post.
The government still needs to legislate for the creation of the ARGA, which requires a statutory instrument, but due to Brexit overload on parliamentary time, there is no indication as yet of when this will happen.
The new team will have to implement a number of reviews of the audit profession, including the outcome of the Competition & Markets Authority (CMA) recommendations for wholescale audit reform.
The CMA proposals are currently being reviewed by the government with a view to announcing wide-ranging reforms with the possible introduction of joint audits and even a hiving off of audit practices at the largest audit firms.
One of the first items on the agenda for Sir Jon will be an appearance before the BEIS Committee, chaired by Rachel Reeves MP, focusing on the collapse of Thomas Cook and the role of the auditors, most recently EY and previously PwC, as well as stewardship and governance at the failed travel giant.
The Committee has been highly critical of the audit profession and the regulator, with Reeves describing the FRC as being ‘asleep at the wheel. It is not a regulator that has been led well and this needs to change.’
Sir Jon said: ‘I am pleased to be joining the FRC as it begins the transition to a new regulator with stronger powers to hold companies, their directors, advisers and shareholders to account.
‘I am also committed to building on the governance and stewardship standards the FRC has helped to champion to ensure businesses reflect modern-day society, are diverse and inclusive, and are maximising the future pipeline of talent.’
There is enormous pressure and scrutiny on the new management team to see how they will shake up the audit regulatory system in the UK and improve the quality of audit and governance at top listed companies.
Dingemans said he had ‘a clear mandate to be a very different and more effective regulator.
‘The FRC and its successor, the ARGA, has a key role to play in setting and upholding high standards for audit, reporting, governance and stewardship in order to protect the interests of investors and other end-users of financial information.’
Report by Sara White
Top FRC team at a glance
Simon Dingemans, FRC chair, was CFO and a member of the main board of GlaxoSmithKline plc from 2011-2019. During his time with GSK, he oversaw a period of significant business transformation including extensive restructuring and the strategic re-shaping of the group and its three global businesses. Prior to joining GSK he was a managing director and partner at Goldman Sachs. He was chairman of the 100 Group of Finance Directors between 2014 and 2016.
Sir Jon Thompson was CEO of HMRC until September of this year, where he was responsible for driving through a reorganisation of the tax authority, with major restructuring and office centralisation, as well as implementing a significant digital tax programme which saw the launch of phase one with Making Tax Digital for VAT from April. Previously he was permanent secretary at the Ministry of Defence, jointly leading the £36bn organisation with the chief of the defence staff. He has had a lengthy finance career including as director general, finance at the MoD, director general, corporate services at the Department for Education and finance director of Ofsted. Before joining the civil service in 2004, he held a number of finance roles in the public and corporate sectors. He is also a board director of the National Leadership Centre.