Reporting Standard 1 is mandatory for all GB quoted companies and any other entities that purport to prepare an OFR.
The Reporting Standard requires directors to prepare an OFR addressed to members, setting out their analysis of the business, with a forward-looking orientation in order to assist members to assess the strategies adopted by the entity and the potential for those strategies to succeed.
The information disclosed in the OFR will also be of relevance to other stakeholders. The OFR should not, however, be seen as a replacement for other forms of reporting addressed to a wider stakeholder group.
The Reporting Standard sets out a number of other principles regarded as essential to the preparation of an OFR, namely that the review shall: both complement and supplement the financial statements; be comprehensive and understandable; be balanced and neutral; and be comparable over time.
The Reporting Standard sets out the key elements of the disclosure framework that directors should address in an OFR, together with requirements to include details on particular matters to the extent necessary to meet the objective of the OFR and the general disclosure requirements.
Those Key Performance Indicators (KPIs) judged by the directors to be effective in measuring the development, performance and position of the business of the entity shall be disclosed, together with information that will enable members to understand and evaluate each KPI.
The Reporting Standard encourages the inclusion of other performance indicators and evidence to support the information included in the OFR.
The Reporting Standard is accompanied by Implementation Guidance that provides illustrative examples of KPIs that might be disclosed in an OFR, as well as further guidance as to what is envisaged with regard to particular matters.
