Over the past few years, the UK has been reshaping its corporate reporting and audit landscape. While earlier reforms mainly targeted listed businesses and financial institutions, the scope is now widening to capture large private companies as well.

This represents a significant shift. For many organisations that have never previously faced the spotlight of public market rules, the requirements around audit, governance and accountability will soon feel very different.

The Changing Landscape

At the heart of these reforms is the decision to extend the definition of “Public Interest Entities” (PIEs) to include very large private businesses. Companies with at least 750 employees and annual turnover above £750 million will fall within scope, bringing them under far closer regulatory scrutiny.

They will be treated, in many respects, like listed companies, even if their shares are not publicly traded. This change is designed to recognise the influence that the largest private companies have on the economy, employees and suppliers and the risks that poor governance could present to wider society.

Alongside this expansion, the Financial Reporting Council (FRC) is being replaced by a new, more powerful regulator, the Audit, Reporting and Governance Authority (ARGA). Unlike the FRC, ARGA will have statutory powers, meaning it can not only monitor and inspect audits, but also sanction directors where reporting or governance standards fall short. It will be able to compel companies to restate accounts, enforce stricter reporting obligations, and hold both auditors and boards directly accountable.

Directors of large companies are therefore about to face enhanced responsibilities. The reforms include proposals that boards must provide statements about the effectiveness of internal controls and explain how risks such as fraud are identified and managed. This represents a significant cultural change, placing directors in a position where they are explicitly accountable for the integrity of their reporting environment. For private companies that have historically operated with lighter touch governance frameworks, this will require substantial adjustment.

Reporting obligations are also being extended. In future, affected companies will be expected to disclose more about their resilience, their distributable reserves, and their audit and assurance policies. The reforms also emphasise the need for transparency in explaining how boards prevent and detect fraud, how they oversee risk, and how they ensure that financial statements remain robust in periods of stress. This is a far more comprehensive form of disclosure than most private businesses have ever been asked to provide.

Finally, governance expectations are tightening. Updates to the UK Corporate Governance Code, which apply to listed companies from 2025, are setting a higher standard of best practice. Although private companies will not necessarily be bound by the Code itself, those that fall within the new definition of PIEs will be expected to adopt equivalent principles, such as those outlined in the Wates Principles for large private company governance. Stakeholders, lenders and regulators will increasingly look to these frameworks as benchmarks of good governance, making compliance in practice almost unavoidable.

Preparing for the New Regime

For large private companies, the implications are profound. Boards should begin by assessing whether they will be caught by the new thresholds, not only based on current figures but also on projected growth. If the organisation is close to the line, preparation should start early, as embedding stronger governance processes takes time.

Attention should then turn to internal controls. Many private companies will need to design and implement formal frameworks for documenting and testing the effectiveness of their financial controls, ensuring they can withstand external scrutiny. Likewise, fraud prevention measures and risk-management systems should be reviewed and, where necessary, upgraded to provide boards with the assurance they will need to make the required public statements.

Audit and assurance policies will also require attention. Companies that have treated audit as a compliance exercise will need to rethink their approach, moving towards a more transparent and comprehensive dialogue with stakeholders. Boards and audit committees should also be preparing for the fact that their own accountability is being elevated. Directors cannot assume that shortcomings will be dealt with solely at the audit firm level, under ARGA, their own decisions and oversight will be subject to regulatory sanction.

The Risks of Delay

Failure to prepare for these reforms could have serious consequences. Companies that do not strengthen their governance may find themselves facing regulatory penalties, shareholder criticism or even litigation if reporting is found wanting. Directors risk reputational damage and, in some cases, personal sanctions. Beyond compliance, poor preparation can undermine investor and lender confidence, increase the cost of capital, and damage relationships with employees and customers.

There is also a financial dimension. Attempting to make these changes at the last minute will almost certainly prove more costly. Audits may become more difficult and expensive, and hurried remediation can create further disruption. By contrast, companies that adapt early will spread costs over time and integrate stronger governance more naturally into their operations.

Areas Still in Flux

It is important to note that some elements of the reforms remain subject to debate. The precise thresholds for inclusion, the detail of resilience and internal controls reporting, and the way certain disclosures will be assured are all still being finalised.

There is also political discussion about whether elements of the regime should be delayed or softened to avoid overburdening businesses. However, the overall direction of travel is clear: transparency and accountability are being strengthened, and large private companies will be required to meet higher expectations.

Conclusion

These reforms are not simply a matter of regulatory compliance. They reflect a broader shift in how society expects large businesses to behave: with openness, accountability and integrity. For private companies, this is an opportunity as much as a challenge.

Those who move early to strengthen governance and embrace transparency will position themselves as trustworthy, resilient and attractive to investors, lenders and stakeholders.

Now is the time to act. Review your internal controls and governance structures. Assess the readiness of your board and audit committee. Begin planning your audit and assurance policies for the future.

Most importantly, seek advice from professional advisers who understand the reforms and can help you prepare in a way that is proportionate, efficient and credible.

The new regime is approaching quickly, and those who wait until it is mandatory risk being left behind. By acting now, large private companies can not only avoid regulatory risk but also demonstrate leadership, enhance reputation, and secure long-term confidence in a business environment where trust is everything.