UK Accounting Standards Board issues Operating and Financial Review standard The Accounting Standards Board (ASB) has issued Reporting Standard (RS) 1 ‘The Operating and Financial Review’. RS 1 is the first Reporting Standard issued by the ASB under its new legal powers. The process of developing the standard was started in May 2004, when the UK government announced its proposals for a statutory operating and financial review and indicated that it intended to specify the ASB as the body to make reporting standards for the OFR. The standard applies to quoted companies in Great Britain and to any other entities that purport to prepare ‘operating and financial reviews’. It is a principles-based standard, which in particular makes clear that the OFR shall reflect the directors’ view of the business. The objective is to assist shareholders to assess the strategies adopted and the potential for those strategies to succeed. The information in the OFR will also be useful to a wide range of other users. Amongst other key areas of business operations, the OFR sets out a framework for directors to consider and report on the main risks facing their company and the measures that are taken to control and manage those risks. RS 1 leaves it to directors to consider how best to structure their review, in the light of the particular circumstances of the entity. Similarly, RS 1 does not specify any specific key performance indicators (KPIs) that entities should disclose, nor how many, on the grounds that this is a matter for directors to decide. The standard is accompanied by implementation guidance, which the ASB believes will be useful to directors in considering what to include in their OFR. The guidance sets out some illustrations and suggestions of specific content and related KPIs that might be included in an OFR. From a risk perspective the implementation guidance looks at ways of reporting on customer and stakeholder risks; environmental risks; employee risks and social responsibility risks. PDF copies of RS1 'The Operating and Financial Review' can be downloaded from here.
•Date: 12th May 2005 • Region: UK•Type:
Article •Topic:
Operational risk |
