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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

The Bruce Column — From reporting to thinking: what the annual survey shows

07 Oct 2015

The evidence is in from the latest Deloitte survey of annual reports. The cultural change which stems from strategic reports, more incisive narrative reporting, and the integrated thinking brought about through integrated reporting, is accelerating. Our regular, resident columnist, Robert Bruce, reports.

FRC publishes annual report 2014/15

28 Jul 2015

The Financial Reporting Council (FRC) has today published its 2014/15 annual report (“the annual report”). The annual report reviews the activity of the FRC over the last year, highlights the achievements of the FRC in 2014/15 and also identifies areas that it will focus on in 2015/16.

HMRC publishes consultation on Improving Large Business Tax Compliance

27 Jul 2015

HM Revenue & Customs (HMRC) has published a consultation entitled 'Improving Large Business Tax Compliance'. Amongst other measures, the consultation proposes that large businesses should publish their tax strategy annually. It seeks views on the right medium for publication of this information, in particular whether it should be included in the annual report and accounts.

Government Equalities Office issues consultation on Closing the Gender Pay Gap

16 Jul 2015

The UK Government has this week launched a consultation on how to address the discrepancy between the average earnings of men and women employed by the largest UK employers (referred to as the 'Gender Pay Gap').

NAPF publishes discussion paper on workforce reporting

26 Jun 2015

The National Association of Pension Funds (NAPF) has published a discussion paper highlighting its view that there is limited reporting by companies on their approach to managing the workforce even though the workforce is considered core to the financial performance of a company and in many ways are “a firm’s most valuable asset”.

ICAS publishes guidance on assurance over KPI reporting

19 Jun 2015

The Institute of Chartered Accountants in Scotland (ICAS) has published guidance on the provision of greater assurance and transparency in KPI reporting. The guidance has been published against the backdrop of increased scrutiny of non-financial reporting in a company’s annual report of which KPIs are one element. The objective of the guidance is to enable audit committees and boards to provide users of financial statements with greater insight and understanding into the reliability, relevance and credibility of KPIs included within a company’s annual report.

ICSA publishes guidance note on good practice for annual reports

17 Apr 2015

The Institute of Chartered Secretaries and Administrators (ICSA) has published a guidance note on good practice for annual reports.

The Bruce Column — Insights from the Financial Reporting Council

09 Apr 2015

The Financial Reporting Council is encouraging far-reaching change and innovation in the fields of corporate governance and financial reporting. Robert Bruce, our resident, regular columnist, reports on an interview with the two executive directors involved in bringing about the changes.

UN Guiding Principles Reporting Framework

04 Mar 2015

Supported by the United Nations Working Group on Business and Human Rights, the first comprehensive guidance for companies to report on human rights issues in line with the United Nations Guiding Principles on Business and Human Rights (UNGPs) has been launched. The framework will help companies wanting to improve their reporting on human rights and provides guidance on identifying human rights content for inclusion in an integrated report.

EU Directive on disclosure of non-financial and diversity information published

17 Nov 2014

The Directive on disclosure of non-financial and diversity information by large companies and groups addressing environmental, social, and governance (ESG) issues has been published in the Official Journal of the EU on 15 November 2014.

BIS publishes progress report on the implementation of the recommendations of the Kay review

30 Oct 2014

The Department for Business, Innovation and Skills (BIS) has published a report (“the progress report”) detailing the progress made in implementing each of the 17 recommendations outlined by Professor Kay in his review of the UK Equity market in 2012 (the “Kay Review”). The progress report highlights that “good progress” has been made but that “more needs to be done”.

Council of the European Union adopts ESG disclosure Directive for large companies and groups

29 Sep 2014

The Council of the European Union (“the Council”) has adopted the Directive on disclosure of non-financial and diversity information by large companies and groups.

FRC publishes updated UK Corporate Governance Code

17 Sep 2014

The Financial Reporting Council (FRC) has today published an updated version of the UK Corporate Governance Code (the "Code"), along with two associated guidance documents and revisions to International Standards on Auditing (UK and Ireland) ("ISAs"). The revised Code and ISAs are applicable for periods commencing on or after 1 October 2014.

Financial Reporting Lab publishes insight report on ‘Clear and Concise’ reporting

12 Aug 2014

The Financial Reporting Lab (“the Lab”) has today published an insight report (“the insight report”) highlighting the progress that companies made during the 2013 year-end reporting cycle towards clearer and more concise reporting.

Stay Tuned Online — IFRS and UK GAAP update

04 Aug 2014

The Deloitte London IFRS Centre of Excellence is running a series of hour-long Internet-based financial reporting updates, aimed at helping finance teams keep up to speed with IFRSs and other financial reporting issues. The July 2014 webcast is now available.

FRC publishes annual report 2013/14

16 Jul 2014

The Financial Reporting Council (FRC) has today published its 2013/14 annual report (“the annual report”). The annual report reviews the activity of the FRC over the last year, highlights the achievements of the FRC in 2013/14 and also identifies areas that it will address in 2014/15.

The Bruce Column — Making corporate reporting more useful

02 Jul 2014

Two recent conferences emphasised just how innovative and transformative non-financial reporting is becoming. Our resident regular columnist Robert Bruce reports.

Need to know — FRC publishes Guidance on the Strategic Report

16 Jun 2014

This newsletter discusses the key points of the Guidance on the Strategic Report published in June 2014 by the UK Financial Reporting Council.

FRC publishes Guidance on the Strategic Report

09 Jun 2014

As a first step in the Financial Reporting Council’s (FRC) new programme of work to promote clear and concise reporting, it has published Guidance on the Strategic Report, a comprehensive publication designed to help companies prepare a strategic report that meets both the requirements of the law and the needs of shareholders "the Guidance").

FRC consults on changes to the UK Corporate Governance Code

24 Apr 2014

The Financial Reporting Council (FRC) has today published a consultation (“the consultation”) on proposed changes to the UK Corporate Governance Code (“the Code”). The proposed changes, if implemented, will apply to financial years beginning on or after 1 October 2014.

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