The UK government has agreed to soften its requirements for corporates' mandatory operating and financial reviews (OFRs) after intense lobbying from the business community.
The Department of Trade and Industry (DTI) has announced that it will not require auditors to make sure companies' OFRs have been prepared with ?due and careful inquiry? ? a strict legal standard. Under current rules the DTI requires auditors to make sure the reviews are a ?true and fair? view ? a wider legal term open to more interpretation.
Most of the criticism of the DTI's initial wording centred around concerns that company directors would refrain from including some predictions in the OFR for fear of being held liable if those expectations turned out to be incorrect. The DTI's original plans also included introducing a new criminal offence for directors called ?recklessly approving an OFR?, which would be subject to unlimited fines.
It is not known what the DTI will replace the phrase with, but it is expected to be more business-friendly than its predecessor. The Department is also expected to delay the introduction of the rules from January 1 2005 to April 1.