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Narrative reporting areas of focus

In addition to the directors’ report, the directors of a company other than those qualifying for the small companies exemption in the Companies Act 2006, are required to prepare a strategic report for each financial year.

The Strategic report is currently under the spotlight and is a constant area of FRC challenge.  From ensuring that relationships and linkages between financial and non-financial reporting information are clearly explained to providing better information on how boards have fulfilled their duty under s172 when taking decisions to promote the long term success of the company. There are many things to consider.

Companies within scope will need to comply with the enhanced reporting under the EU non-financial reporting directive which is effective for annual reporting periods beginning on or after 1 January 2017.  They will need to include, within their strategic report, a non-financial information statement and some additional disclosures including those about anti-corruption and bribery matters. The Directive also requires certain diversity disclosures to be presented.  See below link for resources in this area.

Risk reporting and viability statements is another area of FRC and investor scrutiny with calls for greater differentiation of the time periods used by different companies and sectors and a clear rationale for the period selected.

Companies are encouraged to revisit their assessment of the risks and ongoing uncertainties regarding the effects of the EU referendum and impact of other systematic risks, making appropriate disclosures to reflect their latest analysis and how this has developed over the year. 

The FRC has recently published draft updated Guidance on the Strategic Report which will help companies improve in these areas.

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

FRC reminds Boards of companies in the construction and business support services sectors of their reporting obligations

30 Jan 2018

The Financial Reporting Council (FRC) has published reminders to Boards of companies in the construction and business support services sectors of their reporting obligations. Although the FRC guidance is directed at one sector, in the light of the collapse of Carillion, the FRC states it is also relevant to other companies.

FRC publishes Strategy for 2018/21

19 Dec 2017

The Financial Reporting Council (FRC) has published its three year strategy for 2018/21 and its draft budget and levy proposals for the 2018/19 financial year.

FRC to delay finalisation of Strategic Report guidance

04 Dec 2017

The Financial Reporting Council (FRC) has today announced that it is to delay the publication of its amended Guidance on the Strategic Report (“the Guidance”) until after the government has announced its legislative changes in respect of reporting on section 172.

FRC’s Financial Reporting Lab issues report on risk and viability reporting

28 Nov 2017

The Financial Reporting Council’s (FRC’s) Financial Reporting Lab (“the Lab”) has published a report on risk and viability reporting. The report seeks to understand the views of companies and investors participating in the project on the key attributes of principal risk and viability reporting, their value and use. The report also provides illustrative examples of the types reporting that investors favour in this area.

Accounting Roundup - Closing Out 2017

27 Nov 2017

Closing out 2017 discusses the significant corporate reporting issues relevant to 31 December 2017 annual reports, covering areas of regulatory focus identified in the FRC’s Annual Review of Corporate Reporting 2016/2017, ESMA’s common enforcement priorities for issuers in the European Union together with developments in reporting standards and areas of investor interest.

Governance in brief — FRC issues advice on annual reports for 2017/18 reporting season

26 Oct 2017

During October the Financial Reporting Council (FRC) issued its 2016/17 Annual Review of Corporate Reporting and its annual letter to FTSE 350 finance directors and audit committee chairs. This edition of Governance in brief explores the findings in the Corporate Reporting Review (CRR) annual report, the recommendations in the FRC’s year-end advice letter to preparers and the aspects of financial statements and broader corporate reporting that the FRC is looking to companies to focus on in the coming year.

We comment on the FRC's consultation - Draft amendments to Guidance on the Strategic Report - Non-financial reporting

23 Oct 2017

We have published our comment letter on the Financial Reporting Council's (FRC's) consultation on amendments to its Guidance on the Strategic Report.

Deloitte Comment Letter on the FRC's consultation - Draft amendments to Guidance on the Strategic Report - Non-financial reporting

23 Oct 2017

We have published our comment letter on the Financial Reporting Council's (FRC's) consultation on amendments to its Guidance on the Strategic Report.

FRC publishes findings on the quality of corporate reporting in 2016/2017

23 Oct 2017

The Financial Reporting Council (FRC) has published its Annual Review of Corporate Reporting 2016/2017, which provides the FRC's assessment of corporate reporting in the UK based on evidence from a variety of sources, including the work of the FRC's own Corporate Reporting Review (CRR) team.

UK government consults on a streamlined approach to energy and carbon reporting

16 Oct 2017

The Department for Business, Energy and Industrial Strategy (BEIS) has published a consultation which proposes a “streamlined and more effective energy and carbon reporting framework” for the UK.

FRC publishes year-end advice to preparers in advance of the 2017/18 reporting season

11 Oct 2017

The Financial Reporting Council (FRC) has published a letter to Audit Committee Chairs and Finance Directors, in advance of the 2017/18 reporting season, highlighting changes to reporting requirements and aspects of annual reports where the FRC feels that companies can improve.

Annual report insights 2017 — Surveying FTSE reporting

03 Oct 2017

Our latest annual reporting survey, 'Annual report insights 2017' provides insights into narrative and financial reporting trends for UK listed companies, together with ideas to help them improve their annual reports. Hot topics including Brexit disclosures, governance reform and integrated reporting are all addressed.

Governance in brief — FRC encourages broader reporting of company purpose and impact in proposed revisions to the Guidance on the Strategic Report

11 Sep 2017

The FRC has published proposed revisions to its Guidance on the Strategic Report. These revisions encourage companies to report on broader matters that may impact the value and sustainability of business over the longer term and reflect new corporate reporting requirements arising from changes to the Companies Act 2006 which implement the EU Non-Financial Reporting Directive.

Need to know — FRC publishes consultation on amendments to its Guidance on the Strategic Report

30 Aug 2017

This edition of Need to Know outlines the FRC's consultation on amendments to its Guidance on the Strategic Report.

FRC proposes amendments to its Guidance on the Strategic Report

15 Aug 2017

The Financial Reporting Council (FRC) has today published, for consultation, amendments to its ‘Guidance on the Strategic Report’ ("the Guidance").The Guidance remains non-mandatory with a view to encouraging best practice.

FRC publishes a factsheet on the EU Non-Financial Reporting Directive

26 Jul 2017

The Financial Reporting Council (FRC) has today published a factsheet on non-financial reporting that provides an overview of the new regulations implementing the EU Directive on non-financial and diversity information (“EU NFR Directive”).

Need to know — EC adopts guidelines on the EU Non-Financial Reporting Directive

14 Jul 2017

This edition of 'Need to Know' outlines the new European Commission guidelines on the European Union Non-Financial Reporting Directive.

Need to know — Non-Financial Reporting Regulations

15 Feb 2017

The government has enacted 'The Companies, Partnerships and Groups (accounts and Non-Financial Reporting) Regulations 2016' (SI 2016/1245) implementing the EU Non-Financial Reporting Directive (Directive 2014/95/EU). This newsletter discusses the new Regulations.

Regulations implementing EU Non-Financial Reporting Directive published

21 Dec 2016

The Department for Business, Energy & Industrial Strategy (BEIS) has published Regulations which implement the EU Non-Financial Reporting Directive 2014/95/EU on disclosure of non-financial and diversity information by certain large undertakings and groups in the strategic report. The aim of the EU non-financial reporting Directive (EU NFR Directive) is to improve the transparency of certain EU companies as regards non-financial and diversity information.

FRRP findings in respect of strategic report and operating segments

08 Dec 2016

The Financial Reporting Council (FRC) has issued a press release of the findings of the Financial Reporting Review Panel (FRRP) stemming from its review of the annual report and accounts of Sports Direct International plc for the year ended 26 April 2015.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.