The challenge isn't choosing between governance and growth. It's ensuring one enables the other.

Confidence is fundamental to a thriving UK economy. Investors need confidence in the businesses they invest in. Boards need confidence that the regulatory environment enhances decision making. And businesses need confidence to invest, grow, innovate and compete in an increasingly competitive global environment.

That confidence is underpinned by effective governance, high-quality audit and meaningful corporate reporting. As regulation and expectations continue to evolve, the challenge is getting the balance right: maintaining high standards without creating unnecessary complexity or barriers to growth.

These questions were explored at a recent RSM roundtable, bringing together Audit Committee Chairs from listed businesses, senior RSM partners and Richard Moriarty, Chief Executive of the Financial Reporting Council (FRC).

"Investor confidence and economic growth go hand in hand. High standards of governance and corporate reporting help create the conditions for businesses to thrive, and maintaining an open dialogue between regulators, companies and auditors is an important part of achieving that balance." Richard Moriarty, Chief Executive of the Financial Reporting Council (FRC).

Three principles emerged from the roundtable

Effective regulation is essential to maintaining confidence in UK markets. Regulation is at its most effective when it is proportionate, practical and supported by open dialogue.

Businesses should feel able to engage with regulators, ask questions and seek clarity where needed. Richard Moriarty encouraged companies and directors to engage openly with the FRC, reinforcing that the regulator welcomes dialogue with UK PLCs and supports sustainable growth.

That relationship matters. An environment where businesses feel able to have constructive conversations with regulators can help them navigate complex requirements, exercise sound judgement and focus on the outcomes that regulation is intended to achieve.

This is particularly important as the UK seeks to strengthen its international competitiveness and drive economic growth. High standards of governance and regulation should not be viewed as obstacles to that ambition. Done well, they create the confidence that supports investment and long-term growth.

The UK's principles-based approach to corporate governance is one of its strengths. It recognises that good governance is rarely one-size-fits-all and that professional judgement matters.

The principle of 'comply or explain' is central to this approach. A well-considered explanation can provide greater insight than a box-ticking approach to compliance. Explanations allow Boards to explain the context behind their decisions and demonstrate how they have achieved the underlying objectives of good governance.

This is particularly relevant to Provision 29 of the FRC’s Corporate Governance Code. The requirement formalises expectations around Boards' oversight of internal controls, although the underlying responsibility is not new. Boards have always been accountable for understanding and overseeing the effectiveness of their key controls.

There is a risk that a cautious interpretation of new provisions can create unnecessary complexity, consume management time and distract Boards from the underlying objective. New requirements should not automatically mean major implementation projects. The focus should be on a pragmatic, proportionate approach that meets the intent of the requirements without creating unnecessary burden.

The opportunity is therefore to use these requirements to strengthen communication with investors and other stakeholders in a transparent way, rather than allowing them to become another burdensome compliance exercise. Clear explanation, sound judgement and meaningful challenge should sit alongside the formal reporting.

Culture is critical to making this work. A principles-based framework depends on organisations, auditors and regulators being willing to engage openly, ask questions and challenge constructively. The principles of meaningful dialogue need to be reflected not only in policy, but in how businesses experience their interactions with those who oversee, audit and regulate them.

Good governance is ultimately about more than following rules. It is about understanding the risks that matter, making informed decisions and being prepared to explain how they are being managed.

Corporate reporting has evolved significantly in recent years. Expectations have increased across financial reporting, governance and sustainability, while improvements in audit quality and corporate reporting have helped make financial statements more understandable and strengthen confidence in UK markets.

The next challenge is ensuring that progress does not come at the expense of usefulness.

More reporting does not automatically mean better reporting. The objective should be to provide information that is material, clear and relevant to the decisions investors and other stakeholders need to make. Less is often more.

That means reporting should reflect the size, complexity and risks of an organisation. It should focus attention on what matters rather than adding layers of detail that make important information harder to find.

This balance is increasingly important as reporting requirements have expanded significantly in recent years. Businesses, auditors and regulators all have a role to play in ensuring that higher standards translate into better information, rather than simply more information.

The objective of high-quality reporting should not be to produce more reporting, but better reporting.

What does this mean for UK corporate reporting?

The UK does not need to choose between high standards and economic growth. It needs a regulatory and governance environment that enables both.

That means regulation that builds confidence while remaining proportionate. Governance that puts judgement and transparency ahead of box-ticking. And reporting that gives investors the information they need without creating unnecessary complexity or burden, so they can make informed decisions.

Getting that balance right will require continued dialogue between Boards, businesses, auditors and regulators. It will also require an open culture in which organisations feel able to ask questions, explain their decisions and challenge constructively.

The quality of audit and corporate reporting has made significant progress in recent years. The opportunity now is to build on that progress in a way that strengthens confidence in UK markets while supporting businesses to invest, innovate and grow, and to ensure that the UK remains an attractive place to grow and IPO businesses.

At RSM, we believe bringing different perspectives together is an important part of that process. Conversations between Boards, regulators and the profession can help challenge established thinking, build mutual understanding and contribute to the future of audit, governance and corporate reporting.

The goal is not simply better compliance. It is better governance, better information and greater confidence in UK business.

"Bringing together Audit Committee Chairs, regulators and audit leaders for open discussion is incredibly valuable. These conversations help build mutual understanding, encourage different perspectives and ultimately contribute to stronger governance and greater confidence in UK business. At RSM, we're proud to create opportunities for those conversations to take place." Jonathan Ericson, Head of Audit at RSM UK.

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