8.128 The 2003 Accounting for People Taskforce, sponsored by the UK Department of Trade and Industry (DTI), recommended that companies should clearly communicate the links between their HCM policies and practices and their business strategies and performance, and the information should be reported in operating and financial reviews.

8.129 In May 2004, the government published a consultation document on Draft Regulations on the Operating and Financial Review and Directors Report . This was in response to the work of the Task Force and other inputs, including the recommendations of the independent Company Law Review and the Accounts Modernisation Directive from the European Union.

8.130 Paragraph 2.5 in part states:

Directors deciding in good faith what would be most likely to promote the success of the company, taking account of a wide range of factors, within and outside the company, which are relevant to achieving its objectives and to an assessment of the business. These factors may well include the company s impact on the environment and on the wider community, and its relationships with employees, customers and suppliers.

8.131 A clear implication is that the management of people risks is a key component of this review and report, and Human Resources professionals should ask that the management of people risks are considered and comment included in the review and report.

8.132 When finalised, the requirements will apply to financial years starting on or after 1 January 2005, recently changed to 1st April...