OFR is of little use to shareholders

The government’s new operating and financial review suffered a major blow
after research concluded individual OFRs might be all but impossible to compare.

Research carried out on behalf of ACCA by Nottingham University Business
School found that the lack of clear reporting guidelines could mean shareholders
cannot use the reports for comparative purposes.

‘Because there is a lack of a detailed template for reporting, that is going
to have an effect on evaluating the comparative merits of individual OFRs,’ said
John Davies, head of business law at ACCA. ‘The report suggests that we are
going to end up with a whole load of statutory OFRs, the effectiveness of which
cannot be easily compared like-for-like, because there is no standard basis on
which companies are expected to report.’

He said that further research needed to be undertaken ‘to see if the fears
now being expressed are actually borne out in practice’.

The report also found that one in four FTSE100 companies did not yet have a
policy in place to determine what information should be included in the OFR. If
left unchecked, these companies could face sanctions from the Financial
Reporting Council.

‘You can’t just lob all sorts of information into the OFR and think you are
fulfilling the purpose of the OFR,’ said Davies.

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