Draft regulations to implement the OFR
were laid before Parliament on 12 January 2005. They
are subject to debate in Parliament before they can
come into force. The draft Statutory Instrument can
be viewed or downloaded from the Stationery Office website
at: www.legislation.hmso.gov.uk/stat.htm
Regulatory Impact Assessment
The Regulatory Impact Assessment
accompanying the OFR regulations is available here.
Draft guidance
The Department has prepared guidance
for companies on the OFR and changes to the directors’
report. This
guidance is a draft. The Regulations that implement
the changes described in the guidance have not yet
been debated by Parliament. The guidance will be finalised
when this has been done.
The guidance has no legal force but is intended
to help businesses understand the main features of
the Regulations and the circumstances in which they
apply. Those affected by the Regulations should refer
to them for a full statement of the legal requirements
and, in case of doubt, seek legal advice on questions
of interpretation.
The guidance is available here.
ASB draft reporting standard
In November 2004 the ASB issued an Exposure Draft of a Reporting
Standard on the OFR (RED 1).
The proposals in the RED build on the requirements
of the Regulations and the ASB’s existing 2003 statement
of best practice on the voluntary OFR.
The proposals involve a principles-based standard, which in
particular makes clear that the OFR must reflect the
directors’ view of the business.
The objective is to assist investors to assess
the strategies adopted and the potential for those
strategies to succeed.
The information will be useful to both shareholders
and other users of accounts.
They also provide a basic framework for directors to apply
in order to meet the requirements of the Regulations. It is for directors to consider how best to use this framework to
structure the OFR, given the particular circumstances
of the entity.
The ASB has also prepared draft Implementation Guidance setting
out illustrations and suggestions of specific content
and key performance indicators that might be included
in an OFR, especially on specific matters referred
to in the Regulations.
Copies of the RED can be downloaded,
free of charge, from the ASB’s website at www.frc.org.uk/asb.
Consultation on draft regulations
The Secretary of State for Trade
and Industry made a statement to the House of Commons
on 25 November 2004 on the way forward on the OFR.
A copy of the Secretary of State’s statement,
which summarises the key policy changes following
consultation is available here.
A copy of the government’s response
to the consultation is available here.
A copy of the consultation document
and draft regulations published on 5 May 2004 is available
here.
Background The
OFR reflects ideas developed by the Company Law Review
and further work by Denise Kingsmill and the Working
Group chaired by Rosemary Radcliffe.
The working group, an independent group of
experts established by Government has published guidance
for company directors preparing OFRs.
Copies of the Working Group’s guidance are
available here.
A press notice issued by the Working Group on 5 May
2004 is available here (73Kb).
PREVIOUS DOCUMENTS
On 11 December 2002 the Government published the
terms of reference of the Group, click here (5Kb)
A Press Notice (P2002/812) issued on 19 December
2002 is available here
The Group
launched a consultation document on 27 June 2003. It addressed the
concept of materiality; the principles to be applied
in arriving at a judgement on materiality; and the
process directors should go through, as part of the
total process of good governance, in deciding what
should be included in their OFR.
A copy of
the Consultation Document is available here (168Kb)
A Press
Notice issued by the Working Group on 27 June 2003
is available here (90Kb)
The formal
consultation ended on 19 September 2003. A list of those
who responded to the consultation is available here (164Kb)
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