Recent annual reports take OFR route
Chancellor's OFR U-turn fails to dampen enthusiasm for narrative reporting
Despite chancellor Gordon Brown cancelling the Operating & Financial
Review (OFR), businesses have still moved towards more transparency in their
narrative reporting, according to a new survey.
The report by Black Sun, entitled ‘The First 23’, looked at the performance
of the first businesses obliged to meet the reporting requirement of the
Business Review- formed from the EU Accounts Modernisation Directive.
It found 48% of companies prepared an OFR, with the bulk of the others using
a business review format.
Although 57% are identifying key performance indicators, the figure drops to
26% in the case of non-financial KPIs.
National Grid and Land Securities reports were cited as best practice
examples of narrative reporting.
David Christopherson, managing director of Black Sun, said although the
chancellor’s decision to scrap the OFR has resulted in ‘significant
uncertainty’, it had created opportunities for companies to use reporting ‘as a
source of competitive advantage, particularly in a global economy where high
standards of disclosure establish trust with the capital markets, investors and
other stakeholders’.
