THE DIRECTORS RESPONSIBILITY STATEMENT IS NOT A LEGAL OBLIGATION
The content of directors' responsibility statements originated from the King Code (King I). It is not a Companies Act requirement. The directors are making statements that may or may not be their responsibilities. There is so much variety in opinion and case law as to what directors responsibilities are I would not want to sign such a document which can be used against a director. The boards only responsibility is to approve the AFS and s 66 of the 2008 Act is very wide in its dictates as to what the board has to do or not do. There is no real guidance as to what approve means and what the board has to do prior to approving AFS. In addition s 66 says nothing as to what the boards responsibilities actually are. King is only guidance and is apply or explain so one should not say definitively in the responsibility statement what the directors responsibilities are. No one really knows 100% what that is and I for one would not stick my neck out by signing such a statement. If there is no legal obligation to have one – in such a litigious climate why have one? The UK and Australia have such a provision for such a statement but RSA does not.
That’s just my view. I think if given a chance directors will not want to sign such a statement and they cannot be forced to sign such a statement. We cannot force any view on them and in any case it is outside the auditors ambit. I honestly believe we must apply the law and not what we believe is best practice. Best practice can create unintended consequences and liability. I as a director may have a claim if the auditor insisted on such a statement when it is not a legal obligation.
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