Jon Symonds, the CFO of AstraZeneca and ASB board member, has joined leading
UK accounting firms and institutes in expressing astonishment at chancellor
Gordon Brown’s surprise decision to scrap the Operating Financial Review (OFR)
just months before its implementation.
Brown made the announcement at the CBI’s annual conference, saying that the
move would remove the red tape burden for businesses.
Speaking exclusively to Accountancy Age Symonds said he was ‘very
surprised’ by the decision.
‘I thought the OFR was largely regarded as, certainly with its financial
orientation, a sensible way to improve the quality of communication between a
company and its stakeholders,’ Symonds said. ‘I didn’t think that it [OFR] was
terribly controverisal so I’m not quite sure I understand what the rationale
behind it is.’
He added: ‘The basic idea of communicating to shareholders through the eyes
of the board seems to be quite sensible. Some of the broader aspects, such as
the OFRS’s now going to have environmental KPIs, now going to bring in social
responsibility, bring in employee metrics, et cetera… that was all largely
eclipsed by picking out the financial metric because this is a report to
shareholders, not to single stakeholder groups.
Ernst & Young’s head of financial reporting advisory, Will Rainey, said
the move would ‘delight business leaders’ who had been confronted with a raft of
regulation recently, but queried why government had had decided to introduce the
OFR in the first place if it was going to be such a burden.
‘The introduction of the OFR was widely criticised, yet the fact that it
would create such a burden on business was ignored,’ Rainey said. ‘If it had
been anticipated that the OFR would be so onerous, why was so much time wasted
enacting the legislation and coming up with an accounting standard to deal with
ICAEW chief executive Eric Anstee said the institute was ‘concerned at the su
dden nature of the chancellor’s decision, given the time, effort and investment
that has been put into the development and introduction’ of the OFR’.
Rival institute CIMA was also disappointed with the move.
‘Confusing the OFR with a reduction in bureaucracy risks losing the benefits
it will deliver to all stakeholders, particularly shareholders. That would be
the wrong step and a fundamentally bad one,’ said CIMA chief executive Charles
ICAS director of auditing and accounting, James Barbour, meanwhile, said ICAS
supported ‘narrative statements in the interests of transparent financial
reporting’ and predicted that many listed groups would continue to publish an
OFR in order to ‘remain at the forefront of good financial reporting’.
Giles Murphy, head of the London Assurance & Business Services department
of Smith & Williamson, said that the change was something of a ‘gimmick’ in
attempting to reduce red tape, and would not affect SMEs: ‘often that’s where
the costs are,’ he said.
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