Brexit & EconomyPoliticsHope fades for OFR u-turn

Hope fades for OFR u-turn

Few expect that the mandatory narrative reporting guidelines will return in law

The government will begin poring over the mountain of views on scrapping the
operating and financial review today, but few expect that the mandatory
narrative reporting guidelines will return in law.

The consultation period on the decision made by chancellor Gordon Brown last
year, to replace the OFR with a stripped down business review closes today, with
mixed opinion coming out of the business community and the accounting profession
over whether the change was a boost to red tape reduction or a grave error of
judgement.

CIMA president Charles Tilley and ACCA chief executive Allen Blewitt have
called for a return of the mandatory OFR – with Tilley citing it as ‘an
opportunity not a challenge’. But others are more than happy with the decision.

Deloitte audit partner Isobel Sharp said: ‘Statutory OFR would have been a
significant burden for British companies as a result of the detailed nature of
the rules, as well as the requirement to obtain legal advice regarding forward
looking information, to extend the work of auditors and to consider the impact
of the detailed external review of OFRs from 2007.’

The government was forced to seek comment on its decision to scrap the OFR
following a legal challenge by environmental pressure group Friends of the
Earth, which was concerned about the disappearance of requirements for companies
to report on environmental impacts.

But many remain unconvinced that much will happen, even if the weight of
opinion came out in favour of resurrecting the OFR.

One senior member of the profession said the government had already decided
not to listen to what anyone was saying on the subject, despite the extended
consultation.

Any decision on changes could well rest on inter-departmental politics rather
than outside opinion. Confidential memos released by the Treasury showed that
the chancellor pushed through the move, despite opposition from the DTI – the
department with responsibility for the OFR’s implementation.

If the OFR were to be resurrected, amendments would have to be included in
the company law reform bill, after a standing Commons committee last week voted
– by a majority of eight votes to seven – to repeal the regulations.

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