Tougher auditing regulations for companies proposed by trade and industry secretary Patricia Hewitt could lead to company directors facing unlimited fines.

Under the new regime detailed in the new Operating and Financial Review, directors must decide what relevant information should be included in financial reports. This could include anything from personnel policies to environmental risks posed by a company.

But business groups claimed requirements for a “due and careful inquiry” could expose directors to a potential criminal record and unlimited fines.

Investors welcomed the proposals, claiming the government’s approach towards business transparency reflected the needs of shareholders.