Fear of adverse media comment or an inquiry from the Financial Reporting Review Panel will encourage companies to produce meaningful narrative and analysis when preparing their Operating & Financial Review (OFR), says a study published today by ACCA (the Association of Chartered Certified Accountants). The report, which was based on consultation with leading companies, will overcome fears that the absence of a strictly defined format for the OFR will lead to bland statements, says ACCA.
"There had been widespread concerns that companies would just produce bland 'boiler-plate' statements, which is why we fully supported the decision to require Key Performance Indicators for companies reporting,' comments Roger Adams, ACCA Technical Director.
'The penny is dropping that the OFR represents a step-change in reporting. If companies fail to take this opportunity to communicate a compelling vision of where they are going, then shareholders and the wider market will question why. With the Review Panel set to formally examine OFRs in just over a year's time, companies need to start preparing now to get their systems in place to provide the right information."
ACCA also published a second study today, which showed a lack of preparedness among FTSE 350 companies. More than 25% of respondents said their company had no policy in place for determining what information should be included in the OFR.