Making financial reports less complex and more relevant
Jun 05, 2009
The Financial Reporting Council (FRC), the United Kingdom's independent financial reporting regulator, has published a discussion paper arising from its project on reducing complexity in corporate reporting.
The paper – titled Louder than Words: Principles and Actions for Making Corporate Reports Less Complex and More Relevant seeks to address growing concerns about the complexity of corporate reporting. The paper recommends eight guiding principles for reducing complexity: four for better communication in reports and four for improving the quality and effectiveness of regulations. The paper also makes five calls for action where the FRC believes further investigation may lead to opportunities for reducing complexity. These are:
- Cash flow and net debt reporting: could this be better aligned with user needs such as by including a net debt reconciliation?
- Wholly owned subsidiaries reporting requirements: could we find ways to reduce the reporting burden such as by reducing the filing or disclosure requirements?
- Cut clutter: could preparers reduce immaterial information (with the support of regulators) that may be undermining the quality of reports?
- Disclosures: could we overhaul the process for creating disclosures and provide guidance about when they can be deleted as not relevant?
- IFRSs: could we improve usability through logical organisation and clearer articulation of the desired outcomes for each standard?
- Louder than Words: Full Report (PDF 294k)
- Executive Summary (PDF 160k)
