Expanding the disclosure of corporate information to stakeholders or shareholders has always been a fraught process. One of the conundrums in financial reporting is how far good practice drives out bad and how much regulation is needed to try to enforce good practice on those who prefer to provide the minimum of information to users of accounts. One measure which was intended to increase disclosure but now seems to be faltering in its purpose is the operating and financial review (OFR).
This is modelled on the section of disclosures required by US companies, called management discussion and analysis. The idea is to provide a section of the annual report and accounts where all manner of information not included elsewhere can be provided and explained. In particular it is intended to enable useful disclosure of intangibles, from employee motivation to strategy and innovation.
