Remember it was Gordon who scrapped the Operating and Financial Review

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I was musing this morning on what disclosure by companies might have helped foretell of the current financial crisis. And I recalled the Operating and Financial Review. This is what it says of its requirements on the Companies House web site:

S.I. 2005/1011- The Companies Act (Operating and Financial Review and Directors' Report etc) Regulations 2005

The regulations introduce a new requirement in the Companies Act 1985 for directors of quoted companies to prepare an operating and financial review (OFR) for financial years which begin on or after 1 st April 2005.

The OFR must provide a balanced and comprehensive analysis consistent with the size and complexity of the business of:

- The business's development and performance during the financial year;
- The company's (or group's) position at the end of the year;
- The main trends and factors underlying the development, performance and position of the company (or group) and which are likely to affect it in the future.

The regulations also:

- Expand the existing requirement for companies to include a fair view of their business in their directors' report;
- Establish a requirement for auditors to express an opinion on the consistency of the OFR and directors' report with the accounts; and
- Establish a criminal and administrative enforcement regime for both the OFR and the directors' report.

Now, wouldn't that have helped? I think so.

But let's be clear about what happened on 28 November 2006:

Gordon Brown is to scrap the operating and financial review (OFR) in a bid to cut down on red tape.

The chancellor is set to tell the CBI conference today that the government is to abandon the document in a surprise move. The OFR, although opposed by the Conservatives during the election campaign, had been thought likely to shine a light onto aspects of companies hitherto undisclosed, including fuller explanations of oil reserves, for example.

Nigel Sleigh-Johnson, head of financial reporting at the ICAEW, said: 'I hadn't detected a huge amount of opposition from business.'

Sleigh-Johnson was right: business was entirely reconciled to this after six years of consultation. They had realised that a risk assessment was part of what they had to supply.

But Gordon Brown did some gesture politics and we lost it.

And it took Friends of the Earth to object. All credit to them, because they got this right.

We needed a risk assessment. We did not get it. And there is just one man to blame. He's now the Prime Minister. That's where the buck stops for the fact we may not have had the information we need to assess the risks UK companies were taking. I'm not expecting to hear any apologies soon.