Ministers are to kick off a search for the first chair of a powerful new statutory audit regulator amid a wide-ranging shake-up of the industry.

Sky News has learnt that the Department for Business, Energy and Industrial Strategy (BEIS) will advertise in the coming weeks for a new chairman of the Financial Reporting Council (FRC), the existing watchdog.

Sources said that the appointee would automatically go on to chair the new Audit, Reporting and Governance Authority (ARGA) when it is established in about 2023.

Keith Skeoch, the FRC’s interim chair, has had his contract extended in recent weeks to run until October, according to insiders.

Ironically, the extension of his tenure takes Mr Skeoch well beyond the nine-year stint on the FRC board that the regulator regards as a ceiling on the independence of directors on corporate boards.

The search for a long-term successor to Mr Skeoch will come as the audit sector awaits the conclusion of a consultation on its future.

A wide-ranging white paper on audit and corporate governance, published in March, paved the way for new reporting obligations for companies as well as measures to break up the dominance of the big four firms Deloitte, EY, KPMG and PricewaterhouseCoopers.

The consultation is due to close in July.

The renewal of Mr Skeoch’s interim contract means that the FRC will have been without a permanent chair for well over a year, with Simon Dingemans having stepped down 12 months ago.

The government has proposed major reforms to the sector and its regulation following a string of prominent audit failures, including at BHS and Carillion, which ultimately collapsed with the loss of thousands of jobs.

The FRC’s abolition has been spurred by a report by Sir John Kingman, the former Treasury mandarin who now chairs Legal & General and Tesco Bank, who proposed that ARGA should have much tougher powers.

Mr Skeoch is the former chief executive of Standard Life Aberdeen, which recently announced a plan to rename itself Abrdn.

The exit of Mr Dingemans came just months after he and Sir Jonathan Thompson, the FRC chief executive, were installed in their posts.

The chairman’s departure followed a disagreement about the nature of any external appointments that he would be allowed to take alongside his FRC job.

A BEIS spokesman declined to comment on Friday on the extension of Mr Skeoch’s contract or the search for a long-term successor.

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