Despair as consultation on OFR descends into farce

Negotiations urgently arranged to discuss the government’s reform of the
operating and financial review are set to backfire after senior figures from the
profession warned all confidence had been lost in the government’s consultation

The Department of Trade and Industry announced last week it was expanding its
discussion on the replacement business review, allowing respondents to argue
against the move to abandon mandatory OFRs, following a legal challenge by
Friends of the Earth.

But the situation has been described as a ‘farce’ by some and, while talks
with the government on the matter continue, few within accountancy now expect
the expanded consultation to produce a change of heart.

An influential Big Four partner said that the profession now had ‘absolutely
zero confidence’ in the government’s consultation process. ‘They are expanding
the consultation, but have no intention of changing the policy. They are simply
extending the period in which they will not listen to what we have to say. It is
a shambles.’

‘They have extended the consultation period merely to buy off Friends of the
Earth,’ said another key representative. ‘All they are doing is giving a
political answer to some inconvenience that came their way. The way it was done
was not clever and it wasn’t thought through.’

The move to review the OFR’s scrapping signalled an end to legal action by
the environmental group, which had accused trade and industry secretary Alan
Johnson and chancellor Gordon Brown of acting unlawfully when scrapping the OFR.
The government has agreed to pay the group’s legal costs.

Phil Michaels, legal adviser for Friends of the Earth, said he was
‘delighted’ with the result, but shared some of the profession’s concerns.

‘We really hope that the government’s behaviour hasn’t put stakeholders off
contributing to the consultation,’ he said. ‘We hope they realise how important
this is.’

A DTI spokeswoman moved to allay these concerns, saying the consultation was
‘full and open’, and that the latest views and evidence would be considered.

Some observers remain hopeful that the government will be encouraged to make
changes. Nigel Sleigh-Johnson, head of financial reporting at the ICAEW, said:
‘There may be room to make significant changes to business legislation.’

Gerald Russell, senior partner at Ernst & Young, who also called the
situation a ‘farce’, said: ‘If we can use the consultation period to get
something sensible back on the rails, in the interest of good quality reporting,
then that will be a good thing. If on the other hand we don’t, then it is just
wasted time.’

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