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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

FRC publishes a staff factsheet on climate-related matters for FRS 102 reporters

16 Nov 2021

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

11 Nov 2021

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

UK government publishes draft legislation on climate-related financial disclosures

05 Nov 2021

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.

FRC Lab publishes a report on better practice TCFD reporting

01 Nov 2021

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

27 Oct 2021

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.

FRC Lab publishes its latest project report on reporting on risks, uncertainties, opportunities and scenarios

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

21 Jul 2021

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

16 Mar 2021

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.

ICAEW publishes guide highlighting key considerations for the 2020/21 reporting season

18 Dec 2020

The Institute of Chartered Accountants in England and Wales (ICAEW) Financial Reporting Faculty has published a guide highlighting key areas that preparers should focus on in the forthcoming reporting season.

FRC publishes consolidated covid-19 guidance for companies and auditors.

14 Dec 2020

The Financial Reporting Council (FRC) has published consolidated COVID-19 guidance for companies and auditors. The consolidated guidance supersedes all previous FRC guidance for companies and auditors.

FRC announces thematic reviews and priority sectors for 2021/2022

11 Dec 2020

The Financial Reporting Council (FRC) has announced its corporate reporting and audit quality review programme for 2021/22 alongside its priority sectors for review.

Financial Reporting Lab publishes its final newsletter for 2020

11 Dec 2020

The Financial Reporting Lab ("the Lab") has published its Q4 newsletter providing highlights of its activities in the fourth quarter of 2020.

Governance in focus — On the board agenda 2021

10 Dec 2020

As 2020 draws to a close, our annual review of board topics will stimulate your thinking and help prepare you for the year ahead.

Accounting Roundup - Closing Out 2020

10 Dec 2020

Closing Out 2020 discusses the significant corporate reporting issues relevant to 31 December 2020 annual reports, covering areas of regulatory focus identified in the FRC's annual review of corporate reporting 2019/20, issues arising from the COVID-19 pandemic and the current economic environment and developments in reporting standards and areas of investor interest.

President of the EFRAG Board consults on his views on non-financial reporting standard-setting

01 Dec 2020

In October 2020, EFRAG Board President Jean-Paul Gauzès invited all interested stakeholders to contribute views related to his ad personam mandate from the European Commission to develop proposals for possible changes to the governance and funding of EFRAG in the context of non-financial reporting standard-setting.

Governance in brief - FRC issues advice on annual reports for 2020/21 reporting season

23 Nov 2020

FRC issues advice on annual reports for 2019/20 reporting season

FRC publishes year-end advice to Audit Committee Chairs and Finance Directors in advance of the 2020/21 reporting season

14 Nov 2020

The Financial Reporting Council (FRC) has published a letter to Audit Committee Chairs and Finance Directors, in advance of the 2020/21 reporting season, setting out its expectations for preparers of reports and accounts for the coming year.

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