Consultation outcome

Government financial reporting manual 2020 to 2021: consultation on revisions

Updated 19 December 2019

1. Introduction

HM Treasury is consulting on revisions to the government financial reporting manual (FReM), which provides statutory guidance for government bodies preparing annual reports and accounts. The revisions have been proposed in light of the government financial reporting review and a thematic review of the Statement of Parliamentary Supply (SoPS), and are intended to improve both reporting in annual reports and accounts and supporting guidance for preparers. Further context on the FReM and reviews is provided below.

The revised FReM has been published alongside this consultation, as the FReM 2020-21 exposure draft. A full amendment log detailing and explaining the planned changes can also be found in the annex of this document. Respondents should refer to both the exposure draft and amendment log to understand the changes proposed and the rationale supporting them.

This consultation will run for six weeks, closing on Friday 25 October 2019.

HM Treasury invites and welcomes responses to the questions detailed below. However, please do not feel the need to answer all questions if you are not able to do so or if they are not relevant – we value any feedback. Please complete the survey or send responses to resource.accounts@hmtreasury.gov.uk.

The consultation is divided into two sections:

• section 1 deals with revisions to the FReM resulting from the government financial reporting review
• section 2 deals with revisions to SoPS reporting resulting from the SoPS thematic review and details the proposed changes in a greater level of detail

1.1 The FReM

The FReM is the statutory guidance for government bodies preparing annual reports and accounts. It:

• sets out principles for financial reporting
• gives guidance on performance reporting and the accountability disclosures for government bodies
• adopts and interprets International Financial Reporting Standards for use in the UK public sector; and
• gives further guidance as necessary, for example relating to the preparation and publication of the UK Whole of Government Accounts

HM Treasury publishes and updates the FReM on an annual cycle, overseen by the independent statutory body, the Financial Reporting Advisory Board (FRAB).

Each edition of the FReM relates to a financial reporting period beginning each April until the end of the following March. The FReM must be published by the end of December in the year before the start of the financial reporting period to which it relates.

The 2020-21 FReM will therefore be published in December 2019 and after the consultation period.

1.2 The government financial reporting review

In April 2019, HM Treasury published ‘The government financial reporting review’.

This review assessed progress since recommendations for improvements to government annual reports and accounts were made in the 2014 simplifying and streamlining project.

It also considered the issues and recommendations raised by the Public Administration and Constitutional Affairs Committee’s (PACAC’s) ‘Accounting for democracy’ reports in 2017 and 2018.

In response, HM Treasury made a number of commitments to improve government financial reporting, including a review of the FReM.

1.3 The FReM review

The timing of the FReM review is constrained by the statutory guidance update cycle. In order to both make changes as quickly as possible, and to allow time for a more thorough assessment of how well the FReM is supporting departments, HM Treasury has chosen to split the review into two phases.

The proposed improvements to the 20-21 FReM in this consultation form phase I of the FReM review.

The second phase of the review will pick up on any outstanding issues, but otherwise focus more on the style and structure of the FReM as a piece of guidance. Changes will be made to the 21-22 FReM for publication in December 2020.

1.4 SoPS thematic review

The SoPS is a key accountability statement, which compares year end outturn to the Supply Estimate that Parliament has provided statutory authority for an entity to spend against.

HM Treasury committed to undertake regular thematic reviews in the government financial reporting review, in order to continually monitor and improve government reporting. The SoPS was chosen as an area for thematic review following feedback that the SoPS was both difficult to prepare and for users to understand.

The changes proposed and detailed in Section 2 reflect work carried out to date, including a desktop review of over 30 annual reports and accounts, discussions with stakeholders and internal evaluations.

The review of the SoPS has highlighted a number of proposed changes with the view of improving the understanding of the purpose and content of the Statement as well as better links with broader performance reporting. Some of the changes put forward, do not require any additional data to be collected and as a result are recommended to be included as an in year change in reporting requirements for 2019-20 and, subject to the outcome of this consultation will be included in the updated 2019-20 FReM to be published in December 2019. More substantive changes will be included within the 2020-21 FReM and details of all updates are provided in this consultation document.

2. Questions

Question 1

Does the revised four part structure make the FReM more useable? Please include any suggestions for improvements or any general comments on the structure.

Question 2

Does the revised introduction give the right level of information to help understand the nature and purpose of the FReM? Please include any suggestions for improvements or any general comments on the introduction.

Question 3

Does chapter 2 effectively set out the principles and purposes of government financial reporting? Please include any suggestions for improvements or any general comments on the chapter.

Question 4

Do you think the addition of chapter 3 regarding best practice in narrative reporting is useful? Please include any suggestions for improvements or any general comments on the chapter.

Question 5

Is the new chapter 4 regarding the annual reports and accounts effective in bringing together different sections of the FReM in a useful way? Please include any suggestions for improvements or any general comments on the chapter.

Question 6

Is the drafting of mandatory requirements and comply or explain requirements in respect of performance reporting in chapter 5 clear? Please include any suggestions for improvements or any general comments on the chapter.

Question 7

Are the requirements in chapter 6 for reporting risk disclosures, staff turnover and staff engagement scores clear? Please include any suggested improvements plus any general comments on the chapter.

Question 8

Is chapter 7 in respect of the format and content of the financial statements clear and useful? Please include any suggested improvements plus any general comments on the chapter.

Question 9

Do the proposed changes to the FReM improve the guidance overall? What parts are most helpful and why? Are any parts unclear or unhelpful or is anything missing from the guidance? Please provide any suggested improvements plus any general comments on the overall draft 2020-21 FReM.

Question 10

Will the changes to the FReM require your organisation to collect any new data or information or have any unintentional consequences? Please provide details of any likely instances and state how practical this will be for the organisation.

Question 11

What further changes should HM Treasury consider making to the FReM in future reviews? Please provide the reasons for any suggestions.

Question 12

Do you have any comments on the findings on the Statement of Parliamentary Supply reporting as part of the SoPS thematic review and do you think it achieves its objectives as a Parliamentary accountability statement? Please provide any reasons and general comments.

Question 13

Do you agree with the new requirements for the Statement of Parliamentary Supply disclosures to be introduced as an in-year change for 2019-20? Please provide any reasons and general comments.

Question 14

Do you see any value in changing the name of the Statement of Parliamentary Supply? If, so do you have a preference – either one of those outlined above or an alternative name? Please include any reasons and general comments.

Question 15

Do you agree with the new 2020-21 SoPS reporting requirements and do you think these requirements should be on a comply or explain basis? Please provide any supporting comments to your answer.

Question 16

Do you agree with the recommendations and updates to SoPs guidance, and any broader comments on the outcomes of the SoPS thematic review? Are there any further improvements that could be made? Please provide any reasons and general comments.

3. Section 1: Proposed revisions to the FReM

This section outlines a new structure of the FReM, as well as proposals for new and updated chapters.

3.1 The structure of the FReM

The FReM consists of layers of guidance, each of which has a different scope and purpose. For ease of navigation, the revised 20-21 FReM groups related areas of guidance and introduces four separate parts. The four parts and the chapters they contain are as follows:

	Chapter 1 - Introduction
Part A: Principles, purpose, and best practice of government financial reporting:
	Chapter 2 – Government financial reporting principles
	Chapter 3 – Best practice in narrative reporting
Part B: The form and content of government annual reports and accounts:
	Chapter 4 – The annual report and accounts
	Chapter 5 – The performance report
	Chapter 6 – The accountability report
	Chapter 7 – The financial statements
Part C: Applying accounting standards to government annual reports and accounts:
	Chapter 8 – Adopting and interpreting IASs and IFRSs
Part D: Further guidance for government annual reports and accounts:
	Chapter 9 – Further guidance on accounting boundaries
	Chapter 10 – Further guidance on accounting for assets and liabilities
	Chapter 11 – Further guidance on accounting for income and expenditure
	Chapter 12 – Further guidance on accounting for pensions
	Chapter 13 – Whole of government accounts

Question 1

Does the revised four part structure make the FReM more useable? Please include any suggestions for improvements or any general comments on the structure.

3.2 Chapter 1: Introduction

The first chapter of the FReM has been refined for readability, so that it focuses entirely on the nature of the FReM itself. It now covers the purpose, structure, update cycle, and audience of the FReM.

More detailed guidance on accounting boundaries and budgetary controls have been moved to a new Chapter 4, which collects all of the guidance that applies to public sector annual reports and accounts as a whole.

Question 2

Does the revised introduction give the right level of information to help understand the nature and purpose of the FReM? Please include any suggestions for improvements or any general comments on the introduction.

3.3 Part A: Principles, purpose, and best practice of government financial reporting

3.4 Chapter 2: Government financial reporting principles

This new chapter introduces, for the first time, the four purposes of government financial reporting, identified by PACAC in their ‘Accounting for democracy’ reports. Each of the four purposes relates to the needs of a different report user. The chapter therefore discusses the importance of user engagement. It also clarifies that, for annual reports and accounts, the needs of Parliament as the primary user take precedence.

Some of the content in the new chapter 2 is similar to ground covered by the existing Chapter 2: Accounting principles. However, the scope of this new chapter is much broader and the detail on accounting principles for annual reports and accounts has therefore been moved to the new Chapter 4.

Question 3

Does chapter 2 effectively set out the principles and purposes of government financial reporting? Please include any suggestions for improvements or any general comments on the chapter.

3.5 Chapter 3: Best practice in narrative reporting

In the government financial reporting review, HM Treasury found a wide range of examples of good practice in narrative reporting. This new chapter takes lessons from those good examples and gives guidance to help preparers across government improve reporting.

Question 4

Do you think the addition of chapter 3 regarding best practice in narrative reporting is useful? Please include any suggestions for improvements or any general comments on the chapter.

3.6 Part B: The form and content of government annual reports and accounts

3.7 Chapter 4: The annual report and accounts

To improve ease of reference, a new chapter has been created bringing together different sections of the existing FReM, all of which relate to the annual report and accounts as a whole. It consists of:

• elements from the existing Chapter 1, Introduction, that deal with budgetary controls and applying accounting principles to various kinds of bodies (i.e. charities, trading funds, etc)
• the existing Chapter 2, Accounting principles
• the high level elements of the existing Chapter 4, Accounting boundaries
• the elements of the existing Chapter 5, Form and content of the annual report and accounts, that apply to the whole of the annual report and accounts

Question 5

Is the new chapter 4 regarding the annual reports and accounts effective in bringing together different sections of the FReM in a useful way? Please include any suggestions for improvements or any general comments on the chapter.

3.8 Chapter 5: The performance report

Chapter 5 has been extensively revised and contains substantive changes to reporting requirements. The performance report is a key section of the annual reports and accounts, that should provide the user with a complete understanding of the reporting entity and how it has performed. Given its importance and to meet the objectives of government financial reporting laid out in chapter 2 of the FReM, reporting requirements on progress against goals, structure, risk, key information and financial performance have all been strengthened.

In addition, the SoPS review, discussed in Section 2 below, has highlighted that new performance reporting requirements would complement improved SoPS reporting.

This performance analysis section has been substantially revised and incorporates a number of new requirements. The guidance is split into three sections: mandatory, comply or explain and best practice (comply or explain being the principle outlined in chapter 2 of the FReM, where a preparer must either comply with the requirement or explain why they have not). The new mandatory and comply or explain requirements are summarised below.

New mandatory requirements:

The performance overview (5.3) must include:

• a brief description or diagram detailing organisational structure, if not already included
• a summary of single departmental plan objectives, or any other organisational goals
• other performance overview requirements have been carried forward, although some have been expanded. In particular, risk reporting has been enhanced by strengthening the requirement to report on risk, how risks have been mitigated and how they will affect future performance

The performance analysis (5.4) must include:

• reporting on progress against single departmental plans (for those entities that have them), as previously stipulated in PES papers
• reporting on progress against objectives (for entities that do not have single departmental plans)

The requirement to report on non-financial information detailed in 5.4.4 c) is carried forward.

Risk reporting: (6.4.8) Entities should also apply the requirements of the UK Corporate Governance Code 2018 and Orange Book when considering the content of their risk disclosures in the governance statement.

Staff turnover (6.5.16 e) must be disclosed in the staff report, as per Cabinet Office guidance to be published soon.

Statement of Outturn against Parliamentary Supply (6.6):

• SoPS disclosures must be compiled using the structure detailed in the FReM (the structure itself is unchanged)
• supporting text, as detailed in the illustrative disclosures, must be disclosed; an explanation of the budgeting framework must be included, unless included elsewhere in the annual report
• commentary on variances must be provided, unless already provided elsewhere in the annual report; and
• all figures must be presented in £000’s

New comply or explain requirements:

The performance analysis should include as comply or explain (5.4.5):

• further detail on the structure of the organisation, unless sufficient detail has already been provided elsewhere
• further detail on the risk profile of the organisation, including how risks have affected the organisation in achieving its objectives and how they have been mitigated
• unit cost data if central to decision-making or accountability for the organisation
• relevant trend data
• any further key financial indicators or measures not already included
• detail on future plans, if not included elsewhere
• a summary of any accountability issues worth drawing the attention of the user to
• a financial review
• for entities that prepare SoPS, the financial review should include on a comply or explain basis: an explanation of the public sector budgeting framework; a summary table showing outturn compared to estimate; commentary on outturn against Estimate; a summary budget outturn to accounts reconciliation; and a trend analysis

Question 6

Is the drafting of mandatory requirements and comply or explain requirements in respect of performance reporting in chapter 5 clear? Please include any suggestions for improvements or any general comments on the chapter.

3.9 Chapter 6: The accountability report

A new chapter draws together accountability reporting requirements to improve the clarity of guidance. It consists of the existing FReM section 5.3, with minor amendments made to improve readability and incorporates the existing FReM chapter 3, which gives guidance on the SoPS.

For a detailed discussion of the proposed SoPS changes, and related consultation questions, see Section 3 of this paper.

There are a handful of substantive changes to implement actions from ‘The government financial reporting review’, including:

• new reference added on applying the revised UK Corporate Governance Code and Orange Book principles on risk disclosure (6.4.7-11). It is also supported with enhanced language in the performance report
• a requirement to disclose staff turnover and Civil Service People Survey engagement scores (6.5.16f). Users of government annual reports and accounts expressed strong interest in these disclosures for public transparency and accountability, and they are already disclosed by some departments. The staff turnover calculation will be made according to the existing Cabinet Office staff turnover guidance to be published shortly. This is the same basis by which departments currently compile submitted returns to the Cabinet Office

Question 7: Are the requirements in chapter 6 for reporting risk disclosures, staff turnover and staff engagement scores clear? Please include any suggested improvements plus any general comments on the chapter.

3.10 Chapter 7: The financial statements

This new chapter is specific to the format and content of the financial statements and consists of the existing FReM section 5.4. Minor formatting changes have been made for readability as set out in the amendment record below.

Question 8

Is chapter 7 in respect of the format and content of the financial statements clear and useful? Please include any suggested improvements plus any general comments on the chapter.

3.11 Part C: Applying accounting standards to government annual reports and accounts

3.12 Chapter 8: Adopting and interpreting IASs and IFRSs

This chapter retains the two tables, contained in chapter 6 of the existing FReM detailing summarising the public sector adaptations and interpretations to International Accounting Standards (IASs) and International Financial Reporting Standards (IFRSs). The tables are unchanged, except to incorporate any changes to the adaptations and interpretations.

Both the application of international standards and these specific adaptations and interpretations have been through review, consultation, and approval by FRAB. HM Treasury will continue to review and consult on changes or new standards as they come into force.

3.13 Part D: Further guidance for government annual reports and accounts

3.14 Chapter 9: Further guidance on accounting boundaries

This new chapter consists of the second, more detailed half of the existing Chapter 4, accounting boundaries. It discusses accounting for business combinations in the public sector.

To improve the flow of the FReM, this material has been moved into the further guidance section. No further edits have been made.

3.15 Chapter 10: Further guidance on accounting for assets and liabilities

This chapter is unchanged from the existing FReM Chapter 7.

3.16 Chapter 11: Further guidance on accounting for income and expenditure

This chapter is unchanged from the existing FReM Chapter 8.

3.17 Chapter 12: Further guidance on pensions accounting

This chapter is unchanged from the existing FReM Chapter 9.

3.18 Chapter 13: Whole of Government Accounts

This chapter is unchanged from the existing FReM Chapter 10.

3.19 Annexes

One new annex has been added, as Annex 1, with illustrative examples of SoPS disclosures. These are discussed in more detail in Section 2.

The existing FReM Annexes 1-4 are unchanged but renumbered 2-5.

3.20 General questions

Question 9

Do the proposed changes to the FReM improve the guidance overall? What parts are most helpful and why? Are any parts unclear or unhelpful or is anything missing from the guidance? Please provide any suggested improvements plus any general comments on the overall draft 2020-21 FReM.

Question 10

Will the changes to the FReM require your organisation to collect any new data or information or have any unintentional consequences? Please provide details of any likely instances and state how practical this will be for the organisation.

Question 11

What further changes should HM Treasury consider making to the FReM in future reviews? Please provide the reasons for any suggestions.

4. Section 2: The Statement of Parliamentary Supply (SoPS)

This section explains the proposed revisions to SoPS reporting as a result of the initial findings from the SoPS thematic review undertaken by HM Treasury during summer 2019. It discusses the context and rationale for these proposed changes in greater detail.

4.1 Background and the SoPS thematic review

As noted in the introduction to the consultation HM Treasury committed to undertake thematic reviews in the government financial reporting review. The SoPS was chosen as an area for thematic review following feedback that it is both difficult to prepare and for users to understand. The SoPS is a key accountability statement, which compares outturn with the Supply Estimate for both resource and capital expenditure.

The review of SoPS reporting identified the need to better explain the purpose of the SoPS and outcomes reflected in it and improve the link to performance reporting contained elsewhere in the annual report and accounts. New performance reporting requirements to supplement the SoPS have been introduced as a result of these findings. Changes proposed to performance reporting are detailed in chapter 5 of the draft FReM and discussed in Section 1 of the consultation document.

As part of the project, HM Treasury has carried out a desktop review of 30 UK public sector annual report and accounts as well as a smaller sample of private, not-for-profit and other public sector accounts. HM Treasury has engaged with several departments and other stakeholders (including parliamentary users and the NAO) in order to discuss and refine the draft proposals set out in this chapter. The final thematic review should be published by the end of the 2019-20 financial year, and will include findings of the desktop review of annual reports and accounts.

4.2 Initial conclusions drawn on the SoPS

The following conclusions have so far been identified during the thematic review:

• accountability: The SoPS is an (audited) accountability statement reflecting outturn against the Supply Estimate voted by Parliament. However, we found a lack of additional explanatory narrative on the purpose or context of the statement, meaning that the usefulness of the SoPS as an accountability statement, particularly for users not familiar with public spending, was limited
• closure of Estimates: The form and structure of the SoPS mirrors that of the Supply Estimates which provides comparability when reconciling spend with final outturn. However, we found a lack of clarity around this link and it can be difficult to understand the relationship of outturn to plans, particularly for users not familiar with public spending
• financial performance: We found a lack of useful commentary to explain variances and few links to information on financial performance
• a link between outturn and the financial statements: Outturn and Estimates are compiled on a different basis to the financial statements - Estimates are compiled against government budgeting rules, based on National Accounts while financial statements are produced according to IFRS as interpreted and adapted for the public sector. The SoPS links budgets to the financial statements, by providing a reconciliation between the two. However, a lack of supporting explanation and commentary can mean that the link and reasons for reconciling items are not always easy to understand

Question 12

Do you have any comments on the findings on the Statement of Parliamentary Supply reporting as part of the SoPS thematic review and do you think it achieves its objectives as a Parliamentary accountability statement? Please provide any reasons and general comments.

4.3 Proposals to improve SoPS reporting

Following the initial findings from the thematic review, improvements to SoPS reporting have been proposed to improve the understanding of the Statement and its purpose and to link outcomes with broader performance reporting in the annual report and accounts. However, the form and structure of the SoPS should broadly reflect that of the Supply Estimate and, therefore, remain largely unchanged.

Some of the proposed changes, outlined below, are more minor and can be made without the need for additional data collection. As such, these would take effect from 2019-20 and will be amended in the in-year update to the 2019-20 FReM published in December 2019. The changes included in 6.6 of the FReM, the Statement of Outturn against Parliamentary Supply, and Annex 1, Statement of Outturn against Parliamentary Supply illustrative disclosures, of the 2020-21 FReM exposure draft are also to be incorporated into the updated 2019-20 FReM.

More substantive changes will be introduced from 2020-21 and also form part of this consultation. These relate to new performance reporting requirements detailed in chapter 5 of the FReM, particularly in relation to the inclusion of a financial review. The changes are intended to provide further understanding and context, so that the importance and results disclosed by the SoPS is summarised for the user. Changes to performance reporting requirements are being made in line with the revisions to the FReM detailed in Section 1 of this consultation document.

4.4 New requirements proposed to be introduced in 2019-20

Proposed changes to the 2019-20 FReM are set out below:

• structure of the SoPS – An explicit requirement mandating the structure of the SoPS has now been introduced. Please refer to the annex for detail on the form of the illustrative disclosures and formatting
• explanatory text – Preparers must include supporting and standardised text, as provided in the illustrative disclosures which explains the purpose of the SoPS and why it is the key accountability statement. This should be easy for preparers to include and will address a weakness highlighted by the desktop review, that supporting context is often not provided
• all numbers are presented in £000’s – By requiring that all figures in the SoPS are presented in £000’s, this ensures the SoPS aligns to the figures presented in the Supply Estimates. Again, this was already an implicit requirement, but is now explicit
• minor alterations to the SoPS are also included as part of the updated illustrative disclosures, including the addition of DEL and AME total rows in the SoPS summary table. These alterations have been added to aid clarity and to reflect the potential presentational changes made to the Estimates
• the inclusion of a total resource figure in addition to the admin/programme split which have been mirrored through updated SoPS illustrative disclosures
• virements – The presentation of SoPS note 1 now incorporates three columns to show the total Estimate pre-virements, virements made and the total Estimate including virements. Feedback received noted that the presentation of virements could cause confusion and the proposed changes should alleviate this issue
• SOPS note 4, Amounts due to the Consolidated Fund – The title, line items and columns in SOPS note 4 (both 4.1 and 4.2) have been altered to aid clarity, with supporting text provided in the illustrative disclosures to provide context for users regarding amounts due to the Consolidated Fund, which is not provided as part of the SoCTE
• formatting and other minor adjustments – The guidance allows entities to format SoPS disclosures as they prefer so as to align with the style of their annual reports and accounts. However, the illustrative disclosures now provide best practice formatting, for example in relation to highlighting columns or separating rows.

Question 13

Do you agree with the new requirements for the Statement of Parliamentary Supply disclosures to be introduced as an in-year change for 2019-20? Please provide any reasons and general comments.

4.5 Title of the SoPS

Feedback from the Parliamentary Scrutiny Unit has indicated that the title, ‘Statement of Parliamentary Supply’ may not adequately explain the purpose of the statement, especially to a user not familiar with public spending. Consequently, HM Treasury has considered two alternative titles:

1. Statement of Outturn against Parliamentary Supply (SoPS)
2. Statement of Outturn Compared to Supply (SoCS)
3. Retaining the current name – the Statement of Parliamentary Supply

For consistency and to align the statement with other financial statements within the annual report and accounts, such as the Statement of Other Comprehensive Net Expenditure or the Statement of Change in Taxpayers’ Equity, any alternative name suggested should also start with, ‘Statement’. To align with the Estimates process, the statement should also reference ‘Outturn’ and ‘Supply’.

Question 14

Do you see any value in changing the name of the Statement of Parliamentary Supply? If, so do you have a preference – either one of those outlined above or an alternative name? Please include any reasons and general comments.

4.6 New requirements proposed to be introduced in 2020-21

For those entities that prepare a SoPS, in addition to the changes outlines above, it is proposed that the following comply or explain requirements are included in relation to the SoPS disclosures and performance reporting so as to improve links to general financial reporting:

• the inclusion of a financial review which incorporates detail on outturn against Estimate by SDP objective or organisational goal
• budgeting framework – Where the budgeting framework has not already been explained as part of the financial review in the performance report (see chapter 5 of the draft FReM), an explanation of the budgeting framework must instead be included with the SoPS notes; for example, through a flow of funds diagram. This should provide users with an understanding of the framework and of key terms. How exactly the framework is explained is left to the preparer’s discretion
• commentary on variances between outturn and the Supply Estimate – Unless commentary is already provided as part of the financial review in the performance report (see chapter 5 of the draft FReM), it is mandated that commentary on variances between outturn and the Supply Estimate is provided in the SoPS. Preparers are allowed discretion as to what commentary they provide, and whether it covers the SoPS summary table or SoPS note 1
• a summary table showing outturn compared to the Supply Estimate
• a summary budget outturn to accounts reconciliation of outturn to accounts reconciliation
• trend analysis
• following the form of the illustrative disclosures – The form of the SoPS illustrative disclosures. (An exemption from providing explanations for non-inclusion is allowed where removing rows or columns is because they are empty)

Question 15

Do you agree with the new 2020-21 SoPS reporting requirements and do you think these requirements should be on a comply or explain basis? Please provide any supporting comments to your answer.

Recommendations and other updates to guidance:

• linking across the annual reports and accounts – Updated guidance reminds preparers of the importance of linking the SoPS to other sections of the annual report and accounts (and vice versa)
• narrative reporting best practice – The FReM guidance provides recommendations as to best practice when providing narrative and that it must be written with the user in mind, to aid understanding of changes in spending compared to the Estimate, and how that has affected performance and why
• clarity on key terms – To help preparers explain key terms, the FReM provides clarity on some key terms and a link to the Consolidated Budgeting Guidance (currently being revised), where they can find explanations of other important terminology. Feedback noted that the different terms could cause some confusion and that a definition of key terms was not brought together in one place

Question 16

Do you agree with the recommendations and updates to SoPs guidance, and any broader comments on the outcomes of the SoPS thematic review? Are there any further improvements that could be made? Please provide any reasons and general comments.