Narrative reporting areas of focus

The strategic report remains a key area of focus for the FRC, which continues to emphasise the requirement for companies to provide a fair, balanced and comprehensive analysis of the development and performance of the business in the financial year and of its position at the end of the year. 

Whilst improvements have been observed, the FRC continues to identify scope for further improvement and highlights in its Annual Review of Corporate Reporting its most common areas of challenge.  These include lack of connectivity between the strategic report and the wider annual report and failure to address significant matters in the financial review.  

The FRC will continue to challenge disclosure in the non-financial information statement especially where cross references are provided to information elsewhere in the annual report which do not contain the required information.  Additionally it sees scope for improvement in addressing climate-change in non-financial information reporting.

Investors are also calling for improvements in Section 172 reporting.  There are increasing calls for better information on how companies are having regard to their stakeholders and how they have taken their perspectives into account when making key decisions.  Companies are reminded that when cross-references are used from the s172(1) statement to other material in the annual report, these should be accurate and precise, rather than referring to whole sections of the strategic report.  Additionally where s172(1) disclosures are combined with stakeholder engagement disclosures, companies should ensure that all aspects of the required disclosure are still given.  A Financial Reporting Lab report sets out what investors are looking for in this area and how companies can improve their reporting to better meet investor needs.

2021 sees the second year that companies are required to comply with the Streamlined Energy and Carbon Reporting Regulations and the FRC is expecting improvements in disclosure this reporting season.  It expects companies to move away from solely meeting minimum statutory disclosure requirements and to consider how to make these disclosures more relevant and understandable to users.  A recent FRC thematic review provides examples of emerging good practice and sets out the FRC's expectations for future reporting. 

Below is a comprehensive collection of resources — organised chronologically — on narrative reporting areas of focus.  Click for direct access to specific narrative reporting resources:

Related Resources

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Governance in focus — On the board agenda 2022

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The Financial Reporting Council (FRC) has published a staff factsheet to inform preparers of annual reports under FRS 102 of climate-related matters they may need to consider when preparing financial statements and associated narrative reporting.

Governance in brief — FRC issues advice on annual reports for 2021/22 reporting season

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The FRC issues advice on annual reports for 2020/21 reporting season

UK government publishes draft legislation on climate-related financial disclosures

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The Department for Business, Energy & Industrial Strategy (BEIS) has published draft regulations requiring UK public interest entities, Alternative Investment Market (AIM) companies and high turnover companies and Limited Liability Partnerships (LLPs) to make climate-related financial disclosures. The regulations, which amend the Companies Act 2006, will take effect for periods commencing on or after 6 April 2022.

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The Financial Reporting Lab ("the Lab") has published a report to help companies prepare for mandatory Taskforce on Climate-related Financial Disclosures (TCFD) reporting.

FRC publishes findings on the quality of corporate reporting in 2020/2021

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The Financial Reporting Council (FRC) has published its Annual Review of Corporate Reporting 2020/2021. The report sets out the FRC’s expectations of areas of corporate reporting that require improvement and highlights the ten most frequently raised topics where improvements to reporting quality are needed.

Annual report insights 2021 — Surveying FTSE reporting

26 Oct 2021

Our latest annual reporting survey, Annual report insights 2021, provides insights into practices in annual reporting, focusing on areas where requirements have changed, where regulators are focusing or where innovative practices are emerging.

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06 Sep 2021

The Financial Reporting Council’s (FRC’s) Financial Reporting Lab (the Lab) has published its latest project report on reporting on risks, uncertainties, opportunities and scenarios. The report outlines what investors want to understand from corporate reporting on risks, uncertainties, opportunities and the use of scenarios.

FCA consults on proposals to boost disclosure of diversity on listed company boards and executive committees

30 Jul 2021

The Financial Conduct Authority (FCA) has published a consultation on proposals to improve transparency for investors on the diversity of listed company boards and their executive management teams.

FRC Lab publishes report on reporting on stakeholders, decisions and Section 172 statements

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The Financial Reporting Lab of the Financial Reporting Council (FRC) has published its latest report on reporting on stakeholders, decisions and Section 172 statements.

Financial Reporting Lab publishes its first newsletter for 2021

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The Financial Reporting Lab ("the Lab") has published its first newsletter for 2021 providing highlights of its activities in the first quarter of the year.

EFRAG Lab project task force launches survey on non-financial risks and opportunities reporting practices

22 Jan 2021

The European Corporate Reporting Lab project task force on reporting of non-financial risks and opportunities and linkage to the business model has launched a survey on stakeholders’ views on non-financial risks and opportunities reporting practices.

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