Anyone fancy writing a short piece on the OFR?

[sufcintheprem]

It's only a summary document, about three thousand words in length explaining the underlying concepts behind it!

 

[West Country Shrimper]

3k word summary?! Bloody hell. Our summaries at Gloucs Uni only have to be 250 words and that's bad enough

 

[Napster]

Easy. And as I'm bored:

The Operating and Financial Review (OFR) will be a legal requirement for all UK quoted companies for financial years beginning on or after 1 April 2005.

It will require directors to provide and analyse (within the Annual Report) both the current and future development and performance of the business.

The intention of the OFR is to encourage companies to be increasingly open and transparent, helping investors to assess the strategies adopted by the business and the potential for these strategies to succeed.

This will require broader and more forward looking reporting than the information traditionally included in Annual Reports. The OFR will also be subject to review by external auditors.

In order to produce an OFR, many businesses may need to develop new processes and communicate new information.

The OFR will include:

a statement of the business objectives and strategies;
a description of the resources available to the company;
a description of the principal risks and uncertainties facing the group; and
a description of the capital structure, treasury policies and objectives and liquidity of the group.

To the extent necessary to comply with the above the OFR should also include information about:

the employees of the group; environmental matters; and
social and community issues.

Disclosures are also required regarding: the people with whom the group has relations which are essential to the business of the group; and receipts from, and returns to, members.

The OFR will need to include analysis using both financial and other key performance indicators.

Essentially the UK equivalent to the SO Act in the States, it is expected that global compliance will necessarily mean one or the other, so eventually they will merge. But what about EU compliance? What are the penalties for non-compliance?

What will this extra transparency mean to the companies' operations? Who does it favour? Does it make it easier for investment professionals to make the "right" decisions?

Loads of issues there!

 

[Leeboy]

copied and pasted from......................?

 

[Napster]

Quote[/b] (Leeboy @ Dec. 23 2004,11:10)]copied and pasted from......................?

KPMG website, well unbold bit is, rest is my own wisdom having worked on pharma law and IFRS issues.

 

[sufcintheprem]

well, I have to say that's approximately an infinitely better response than I was expecting!

You know you've been at uni too long when you start reading something and as soon as you see a few buzzwords, just start skipping paragraphs. Sadly, the words were Operating, Financial and Review here.

Never thought posting work problems on here would actually work. Might try putting the whole essay brief on here and see what comes up...

One more point as well that may be worth pointing out. The inception of the requirement to prepare the OFR, as opposed to the current optional FRS, has been put back after a load of companies kicked up a stink.

Have to say, the bit above does kind of remind me a bit of the official dti offering....

 

[Napster]

Quote[/b] (sufcintheprem @ Dec. 23 2004,11:17)]well, I have to say that's approximately an infinitely better response than I was expecting!

You know you've been at uni too long when you start reading something and as soon as you see a few buzzwords, just start skipping paragraphs.  Sadly, the words were Operating, Financial and Review here.

Never thought posting work problems on here would actually work.  Might try putting the whole essay brief on here and see what comes up...

One more point as well that may be worth pointing out.  The inception of the requirement to prepare the OFR, as opposed to the current optional FRS, has been put back after a load of companies kicked up a stink.

Have to say, the bit above does kind of remind me a bit of the official dti offering....

You're too kind. Unfortunately in the post-uni world you have to be a bit more detailed!

IFRS isn't optional, it's compulsory for 2005 for all EU listed companies. I should know, I've just written a conference on it!

Some companies in Switzerland eg. have been doing it for years, the only problem is the US who insist on using GAAP, but they're both likely to converge in 2006.

IFRS is also just a set of guidelines and it looks like OFR in that respect. Companies check with their auditors that they've presented everything's OK. So auditors have to be on their toes as well.

Anyway, like anything, the bigger the company, the more prepared they are, and the more employees they have tasked to lead implementation.

ps the DTI are essentially toothless, it's the EU stuff companies have to watch out for- especially if they are to expand internationally.

 

[sufcintheprem]

sh*t. So IFRS's and FRS's aren't the same thing and I'm still talking about accounting on SZ?

 

[Napster]

Quote[/b] (sufcintheprem @ Dec. 23 2004,11:40)]sh*t.  So IFRS's and FRS's aren't the same thing and I'm still talking about accounting on SZ?

Nope. Although UK standards (FRS) will move towards IFRS (International) eventually, it's only compulsory for UK-quoted companies.

 

[sufcintheprem]

rightio. Now this is relying on hungover lecture memory (a very untrustworthy thing at best) but isn't FRS 18 something to do with the OFR and I'm Still talking about accounting on SZ?

 

[Napster]

Quote[/b] (sufcintheprem @ Dec. 23 2004,11:54)]rightio.  Now this is relying on hungover lecture memory (a very untrustworthy thing at best) but isn't FRS 18 something to do with the OFR and I'm Still talking about accounting on SZ?

this was 2 years ago

FRS 18 relates to accounting policies and choosing the most appropriate one. This has some relevance for OFR as it is being more transparent in the way accounts are presented and why they are accounted the way they are.

 

[sufcintheprem]

ok, I'll stop now.

Can't help thinking most of this is stuff I should have been hearing about in lecture halls in my 2nd year.

 

[Napster]

i've only been looking at for the last month but in great detail, talking to CFOs etc. If you need any help drop us a line.