Narrative Reporting: A Public Services Perspective

Financial statements in all sectors are difficult to interpret – and becoming more so. Narrative explanations and commentary are increasingly needed to make sense of financial statements and, particularly for non-profit organisations, to help demonstrate the extent to which the objectives of the reporting entity have been achieved.

This report provides a guide to narrative reporting in theory and in practice applied to public services in England, Wales, Scotland and Northern Ireland, ranging from the explanation of national and international concerns of large government departments to the more personal and local focus of social housing providers.

Public sector and non-profit bodies have been required to publish financial statements for many years and have increasingly been required to provide additional explanations to enhance accountability. Some are required to follow the Accounting Standards Board (ASB) best practice guidance in the Reporting Statement the Operating and Financial Review, while others provide information to stakeholders in other ways.

The report follows up previous CIPFA consultation on the applicability of the Operating and Financial Review guidance to the public benefit sector, while acknowledging that there is a great deal of interest in improving reporting, both in the public and private sector, in part reflecting the financial crisis and concerns over the integrity of political appointees. An increased premium is being placed on reporting which is open and honest, clear and understandable, and sufficiently relevant to stakeholders to be interesting and worth reading.

This review:

• sets out the background to UK and international private and public sector best practice guidance on narrative reporting
• explains and provides extracts from relevant sector guidance
• provides examples which show the guidance being applied by organisations in central and local government, health, education, social housing and charity sectors and illustrating a broad spectrum of helpful and informative reporting

Narrative Reporting: A Public Services Perspective will be of interest both to those who prepare financial statements and related narrative reporting, and finance directors and other members of senior management who set the tone for corporate communications.