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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 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.

FRC publishes the results of its climate thematic review

10 Nov 2020

The Financial Reporting Council (FRC) has published the results of its thematic review of climate-related considerations by boards, companies, auditors and professional bodies and investors. The results of the review highlight that corporate reporting needs to improve to meet the expectations of investors and other users on the urgent issue of climate change.

Financial Reporting Lab publishes third newsletter of 2020

02 Nov 2020

The Financial Reporting Lab ("the Lab") has published its third newsletter of 2020.

Annual report insights 2020-Surveying FTSE reporting

29 Oct 2020

Our latest annual reporting survey, Annual report insights 2020, 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 publishes findings on the quality of corporate reporting in 2019/2020

21 Oct 2020

The Financial Reporting Council (FRC) has published its Annual Review of Corporate Reporting 2019/2020, 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. The report sets out the FRC’s expectations of areas of corporate reporting that require improvement and what it expects companies to focus on in the coming reporting season. The FRC expects companies to consider its findings during the financial reporting process.

FRC Lab publishes a set of tips to help companies make S172 statements more useful

14 Oct 2020

The Financial Reporting Lab of the Financial Reporting Council (FRC) has published a set of tips intended to help companies consider what content to include in a Section 172 statement, how to present it and how to facilitate the process of preparing the statement.

Financial Reporting Lab calls for participants in a new Lab project: reporting on stakeholders and Section 172 disclosures

13 Jul 2020

The Financial Reporting Lab has called on investors and companies to participate in a new project on corporate disclosures on stakeholders, including statements in response to Section 172 of the Companies Act.

FRC updates its COVID-19 guidance for companies to include reporting of exceptional items and APMs

20 May 2020

The Financial Reporting Council (FRC) has updated its COVID-19 guidance for companies to explain how they should report exceptional items and alternative performance measures (APMs) in their reports and accounts in light of COVID-19.

FRC issues editorial updates to the 2018 Guidance on the Strategic Report

14 May 2020

The Financial Reporting Council (FRC) has issued editorial updates to Appendix II and Appendix III of its 2018 Guidance on the Strategic Report .

FRC updates its COVID-19 guidance for companies to include going concern considerations for interim reporters

14 May 2020

The Financial Reporting Council (FRC) has updated its COVID-19 guidance for companies to include considerations for those preparing interim reports.

The new section 172(1) statement – observations from first reporters

29 Apr 2020

This survey presents a picture of how the first wave of December year-end reporters have approached the new section 172(1) statement. It examines emerging practices and provides some example disclosures.

ICAEW webinar on SECR reporting

02 Apr 2020

The Institute of Chartered Accountants in England and Wales (ICAEW) will be hosting a webinar providing an overview of the Streamlined Energy and Carbon Reporting (SECR) regulations.

FRC, FCA and PRA issue Covid-19 guidance for companies and auditors

26 Mar 2020

The Financial Conduct Authority (FCA), Financial Reporting Council (FRC) and Prudential Regulation Authority (PRA) have published a joint statement relating to the impact of Covid-19 on financial reporting.

European Lab seeks members for its second task force

13 Mar 2020

The European Financial Reporting Advisory Group (EFRAG) has published a call for candidates for members of a new project task force on reporting of non-financial risks and opportunities and linkage to the business model.

FRC issues advice to companies and auditors on coronavirus risk disclosures

18 Feb 2020

The Financial Reporting Council (FRC) has today published guidance for companies on disclosure of risks and other reporting consequences arising from the emergence and spread of Coronavirus (COVID-19).

ICAEW UK GAAP update webinar

22 Jan 2020

The Institute of Chartered Accountants in England and Wales (ICAEW) will be hosting a webinar outlining latest developments and implementation issues in UK GAAP and also recent changes to reporting regulations.

Accounting Roundup - Closing Out 2019

10 Dec 2019

Closing Out 2019 discusses the significant corporate reporting issues relevant to 31 December 2019 annual reports, covering areas of regulatory focus identified in the FRC’s Annual Review of Corporate Reporting 2018/2019 and the ESMA’s common enforcement priorities for issuers in the European Union, together with other developments in reporting standards and areas of investor interest.

Governance in brief — FRC issues advice on annual reports for 2019/20 reporting season

14 Nov 2019

The FRC has issued its Annual Review of Corporate Reporting and annual open letter to finance directors and audit committee chairs covering its perspectives on key developments and areas of focus for 2019/20 annual reports. The report sets out the FRC’s “expectations for corporate reporting to improve trust in business”, emphasising the annual report is a vehicle of trust and stewardship.

Need to Know - New reporting requirements for large private companies

31 Oct 2019

This Need to Know addresses the new reporting requirements for large private companies in annual reports for periods commencing on or after 1 January 2019 under the Companies (Miscellaneous Reporting) Regulations 2018 (SI 2018/860).

FRC publishes findings on the quality of corporate reporting in 2018/2019

30 Oct 2019

The Financial Reporting Council (FRC) has published its Annual Review of Corporate Reporting 2018/2019, 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.

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