The Operating and Financial Review: Some Evidence on Its Implementation in Irish Published Accounts

Abstract

The Operating and Financial Review (OFR) was published in July 1993 as a first attempt by the Accounting Standards Board to introduce some form of regulation and structure into the presentation of the narrative content contained at the front of the Annual Report. It was introduced initially as a voluntary document and this paper sets out to examine the extent to which it has been complied with in Ireland in its first year of operation. The paper sets out a classification scheme developed to measure and analyse the increase in volume of OFR disclosures as a surrogate for improved quality. It concludes by acknowledging that the volume of disclosure has increased in relation to the information provided in the Financial Review, though this has been fairly minimal. Very little additional information has, however, been provided in the Operating Review. There are exceptions but these are almost exclusively provided by companies which have adopted a policy of providing a stand-alone document for the Operating and Financial Review rather than including the information as part of the Chairman’s Statement/Chief Executive’s Review.