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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 Corporate Reporting Review Annual Report 2013

17 Oct 2013

The Financial Reporting Council (FRC) has today published the Corporate Reporting Review Annual Report 2013 (“the report”) covering reviews conducted by the Conduct Committee into the current state of corporate reporting in the UK. The report covers reviews carried out in the year to 31 March 2013. It highlights that corporate reporting is "good" among large public companies but less so for smaller listed and AIM quoted companies whose level of corporate reporting suffers from a lack of resources.

The Strategic Report — A practical guide

09 Oct 2013

The new narrative reporting legislation, effective for periods ending on or after 30 September 2013, provides the opportunity for UK companies to take a fresh look at the structure and content of what is commonly termed the ‘front half’ of the annual report. This publication from Deloitte is designed to help businesses make their strategic reports as valuable for users as possible. As well as providing guidance on the key requirements of the existing and new legislation, it provides useful insights into what those requirements really mean and how they might be best approached in practice.

ICAEW report explores the potential for assurance services to extend to the “front half” of annual reports

02 Oct 2013

The Institute of Chartered Accountants in England and Wales Narrative Assurance Working Party (“the ICAEW Narrative Assurance Working Party”) has published a report exploring the potential for assurance services to be extended to cover, not just the financial statements, but the whole of the annual report.

Governance in brief: The new "Strategic Report"

16 Sep 2013

This publication from Deloitte (UK) discusses the requirements of the Strategic Report which all UK companies (except those that are small), whether listed or unlisted, will have to replace the current business review with for accounting periods ending on or after 30 September 2013. This publication discusses the FRC Consultation Draft of best practice guidance on assisting companies to prepare the Strategic Report including the main guiding "principles" and the content elements of a Strategic Report.

The Strategic report - Unlisted companies

11 Sep 2013

This publication explains the impact of the new narrative reporting regulations for unlisted companies and lays out the minimum requirements that must be met in respect of the new strategic report, as well as highlighting some thoughts for better practice. A summary of the key requirements applicable to unlisted companies is also included.

The Bruce Column - A time of change, and of opportunities

10 Sep 2013

The draft guidance on the strategic report suggests that companies will be encouraged to experiment and be innovative in their corporate reporting. Our regular resident columnist, Robert Bruce, reports on how communication of the corporate story is now centre stage. And how the launch of UK Accounting Plus will help this process.

FRC publishes draft guidance to Directors on preparing Strategic Reports

15 Aug 2013

The Financial Reporting Council (FRC) has published an Exposure Draft (ED) of guidance to assist directors of listed companies to apply the Strategic Report requirements set out in The Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 (the “narrative reporting regulations”). The FRC invites comments until 15 November 2013.

Approval of narrative reporting and directors' remuneration regulations

07 Aug 2013

The narrative reporting and directors' remuneration regulations have now been approved without further amendment. The regulations come into effect for periods ending on or after 30 September 2013.

Stay Tuned Online – IFRS and UK GAAP update

05 Aug 2013

Deloitte 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 2013 webcast is now available.

Business, Innovation and Skills Select Committee calls on government to implement Kay review recommendations

25 Jul 2013

The Business, Innovation and Skills select committee (BISC) has today published a report calling on the government to publish “clear, measureable and achievable targets” for implementation of each of the 17 recommendations outlined by Professor Kay in his review of the UK Equity market in 2012 (the “Kay Review”).

FRC publishes annual report 2012/13

19 Jul 2013

The FRC has published their 2012/13 annual report, reviewing their activity over the last year and looking ahead to their key priorities for the future. The report is the first since the FRC's restructuring, which combined eight regulatory bodies into one. Accordingly, it provides an assessment of the current state of corporate governance, corporate reporting, audit and actuarial practice in the UK, the action the FRC is taking and their plans for the future in each of these areas.

ACCA survey highlights that non-financial reporting by companies is inadequate for investors' needs

11 Jul 2013

The Association of Chartered Certified Accountants (ACCA) has published findings from a survey carried out to gather feedback from investors on their use of non-financial information. The survey highlights that whilst investors are placing increasing importance on non-financial disclosures made by companies, companies must do more in order to enhance the value of the information that they provide especially in terms of creating a better linkage to business strategy, risk and financial information.

BIS issues call for views on corporate responsibility

27 Jun 2013

The Department for Business, Innovation and Skills (BIS) has published a call for views on corporate responsibility. BIS intends to publish a framework for action on corporate responsibility by the end of 2013 and intend to incorporate the views received in shaping their final framework. Views are requested by 27 September 2013.

Need to Know - New UK narrative reporting regulations

14 Jun 2013

This publication from Deloitte (UK) discusses the long-awaited narrative reporting regulations issued by the United Kingdom Department for Business, Innovation and Skills (BIS). The regulations which have now been finalised and laid before parliament are the UK government’s response to a project that began in 2010 and are intended to make narrative reporting simpler, clearer and more focussed. The regulations will come into force for periods ending on or after 30 September 2013.

Long-awaited narrative reporting regulations laid before UK parliament

13 Jun 2013

The long-awaited narrative reporting regulations issued by the United Kingdom Department for Business, Innovation and Skills (BIS) have now been finalised and laid before the UK parliament for approval. The regulations are the UK government’s response to a project that began in 2010 and are intended to make narrative reporting simpler, clearer and more focussed.

ACCA research shows that investors are concerned about corporate reporting but also think integrated reporting might help

08 Jun 2013

The Association of Chartered Certified Accountants (ACCA) has issued two reports, ‘Understanding investors: directions for corporate reporting’ and ‘Understanding investors: the changing landscape’, which are part of a research series examining what investors want from corporate reporting. The reports reveal that investors have a lower level of confidence when it comes to corporate reports since the global financial crisis. However, they also show that integrated reporting might provide investors with information they are currently looking for elsewhere.

ICAS suggests that positive assurance on management commentary will restore investor confidence

06 May 2013

The Institute of Chartered Accountants of Scotland (ICAS) has published a discussion paper recommending that the auditor should provide an explicit opinion that the management commentary in the annual report is balanced and reasonable and free from spin.

Stay Tuned Online – IFRS and UK GAAP update

29 Nov 2012

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.

iGAAP Alert — Draft regulations proposing a new structure for narrative reporting in the UK

24 Oct 2012

This alert from Deloitte (United Kingdom) the draft regulations published by the United Kingdom Department for Business, Innovation and Skills (BIS), which propose restructuring narrative reporting for all UK companies.

The future of narrative reporting - Draft regulations published in the UK

18 Oct 2012

In an effort to make narrative reporting simpler, clearer and more focussed, the UK Department for Business, Innovation and Skills (BIS) has published draft regulations for narrative reporting in the UK.

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