03 February 2006
Public sector organisations should introduce operating and financial reviews, even though the government has dropped plans to make them compulsory for the private sector, CIPFA has said.
A consultation paper, written in conjunction with RSM Robson Rhodes, says OFRs, which provide commentaries on a range of performance-related issues, remain a model of good practice for the preparation of financial statements.
Originally, all private firms would have had a statutory obligation to produce OFRs from this year. Public sector organisations were also being encouraged, although not obliged, to adopt the framework drawn up by the Accounting Standards Board.
But Chancellor Gordon Brown announced last November that the requirement was being scrapped.
Martin Sinclair, chair of CIPFA's accounting and auditing standards panel, said OFRs would bring about greater transparency. He said: 'Narrative explanations and commentary are increasingly needed to make sense of financial statements.'
The consultation will close on March 20.
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