Business leaders claim that the government’s system for assessing the costs and benefits of new regulation isn’t working. As a result, the National Audit Office is to investigate the regulatory impact assessment (RIA) system.
This study will address three main questions: What are RIAs meant to achieve? How effective are departments in meeting objectives? What lessons can be learned from good practice in RIAs? It will also examine the principles of regulation, good regulatory process and the role of regulatory impact assessments in that process.
Does it matter to the accountancy profession?
Yes! If unchecked regulation will crush British businesses, pulverising other professions along the way. Under current regulatory procedures, departments are required to prepare an RIA for every proposal they put forward which could impact upon business, charities or voluntary bodies.
The assessment should set out the costs, benefits and risks of the proposal, with the aim of helping to deliver better regulation.
Unfortunately, the system isn’t working. The process frequently generates disastrous results because departments look at a narrow range of costs – not the full commercial impact of their decisions.
The easy option involves the accountancy profession continuing to complain about regulation; the hard choice is to do something about it. Scrutinise the costs departments compute for RIAs supporting the introduction of new legislation. Identify costs departments haven’t considered which could significantly affect the cost benefit analysis. Tip the scales – and the only option open to ministers will be to dismiss the regulations before them.
Existing regulations were introduced on the back of RIAs. Go back and see whether or not RIAs hit the mark. If they missed, analyse why, inform departments of your findings and demand that the legislation be removed.
If no one notices or cares, what incentive does the government have to get RIAs right?
This is the first time that the accountancy profession has been at the sharp end; we must seize the opportunity to create a positive regulatory framework for our clients to work within. We purport to be business advisers to UK plc and Ltd, and we must now act in this capacity.
Ultimately, we are responsible for the regulatory burden that our clients bear.