Summary of comments
- Much depends on Standards yet to be issued. However, too strict requirements on content and director liability risk reducing OFRs to defensive, pointless blandness.
- “Safe harbours” for statements honestly made in good faith should be provided.
- The OFR should be subject to the same standards as the rest of the Annual Report. “Due and careful enquiry” seems to set new, higher, levels.
- The Auditor’s role should be confined to process – not second guessing Directors’ judgements.
- There is a risk that excessive expectations will be raised about the work of the FRRP. A phased approach to enforcement by FRRP is essential.
- The burden of introducing the OFR at the same time as International Accounting Standards for listed companies is too great. Deferment of mandatory OFR requirements is urged.
- Support is expressed for the Government’s approach to CSR and environmental issues.
- Confidentiality provisions under the Listing Rules should be incorporated – subject to the Listing Rules’ provision that the resultant disclosure is not misleading.
- The largest non-listed companies should be required to produce an OFR.
General comments
In general the ACT supports the DTI approach to enhanced disclosures in the form of an Operating and Finance Review. There are however numerous very important points of detail where we believe changes and improvements could be made.
