Here comes the OFR again! Will someone please take it away?
Over the last few days the new UK government has signaled that it plans to re-introduce the Operating and Financial Review (OFR) reporting requirement. This idea has had a chequered history to say the least. The previous administration introduced it as a way of improving transparency only to, at the last minute, abruptly kill it off at the point where companies were going to have to produce one. Lots of time and effort went to waste both within listed companies and their advisors. The whole episode did not do a great deal for the reputation of UK government in the financial reporting arena.
The “big idea” behind the OFR was to encourage companies, within their annual reports, to be more transparent about financial and non-financial matters which are material to shareholder value. Many business representatives argued that it was too prescriptive and, because companies were nervous about possible litigation, would encourage bland statements and a conservative approach. This argument eventually won the ear of the government and the OFR was unceremoniously ditched in favour of the much less specific Business Review. Since then the idea has drifted off the radar of most people – until now.
CO3 encourages our clients to be more transparent. However we really do wonder whether this sudden rebirth is really going to achieve anything particularly in view of the history of the matter. We believe the government and regulatory bodies should concentrate on achieving uniform international reporting standards and imaginative use of technology (the internet anyone?) to communicate this sort of information. The OFR may well only be adding another, rather unwelcome, local complication to the annual reporting exercise in the UK.
