What is one of the anticipated impacts of the replacement of the FRC with the ARGA?

The anticipated impact of replacing the Financial Reporting Council (FRC) with the Audit, Reporting and Governance Authority (ARGA) is primarily focused on the regulatory framework within which audit firms operate. Specifically, ARGA is expected to enhance the regulatory oversight of audit firms, particularly large ones, ensuring that the quality of audits meets the increasing demands for transparency and accountability.

With the establishment of ARGA, there is an emphasis on improving audit quality and establishing a robust framework for the regulation of auditors. This body is aimed at reinforcing the trust and reliability of the financial reporting process, especially in large firms where the stakes and potential risks associated with poor audit practices can have significant consequences.

The other choices, while they may touch on aspects relevant to audit firms and their operations, do not align with the primary purpose of ARGA. For instance, reducing audit costs for firms could be an indirect outcome of improved efficiency but is not a direct aim of the regulatory change. Elimination of all regulatory oversight contradicts the purpose of establishing a new regulatory authority, and extending audit periods to ten years does not accurately reflect the goals of enhancing oversight and maintaining audit quality. Thus, the focus on regulating large firms is the most aligned with the objectives of creating ARGA.