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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

Accountancy Europe recommends revising the EU Non-Financial Reporting Directive

23 Oct 2019

Accountancy Europe has released a call to action recommending five steps to revise the Non-Financial Reporting Directive and strengthen non-financial reporting requirements in Europe.

Annual report insights 2019 — Surveying FTSE reporting

21 Oct 2019

Our latest annual reporting survey, Annual report insights 2019, provides insights into practices in annual reporting, focusing on areas where requirements have changed, where regulators are focusing or where innovative practices are emerging.

Governance in brief — New 2019 reporting requirements for large private companies - a reminder

17 Oct 2019

This publication covers the new governance-related reporting requirements for large private companies in annual reports for periods commencing on or after 1 January 2019.

FRC publishes a statement on the Government's Green Finance Strategy

03 Jul 2019

The Government has announced its Green Finance Strategy which recognises the role of the financial sector in delivering global and domestic climate and environmental objectives. In response, the Financial Reporting Council (FRC) has issued a joint statement with other financial regulators, including the Prudential Regulation Authority (PRA), Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) welcoming the strategy.

Need to Know — FRC Guidance on the Strategic Report

07 Mar 2019

This publication examines the revisions made in the Financial Reporting Council’s (FRC's) revised Guidance on the Strategic Report, published on 31 July 2018.

Environmental reporting guidelines published

04 Feb 2019

Guidance to help companies comply with the Streamlined Energy and Carbon Reporting regulations, including greenhouse gas (GHG) reporting have been published.

New Code launched for corporate governance of large private companies

14 Dec 2018

A new code for the corporate governance of large private companies has been launched.

Accounting Roundup - Closing Out 2018

13 Dec 2018

Closing out 2018 discusses the significant corporate reporting issues relevant to 31 December 2018 annual reports, covering areas of regulatory focus identified in the FRC’s Annual Review of Corporate Reporting 2017/2018, the 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 — GC100 issues practical advice to directors on performance of their s172 duty

06 Dec 2018

GC100, the group of General Counsels of the FTSE 100, has issued updated guidance to help directors in performance of their duty under section 172 of the Companies Act 2006.

Governance in brief — FRC issues advice on annual reports for the 2018/19 reporting season

06 Dec 2018

The Financial Reporting Council (FRC) has issued its Annual Review of Corporate Reporting and annual letter to finance directors and audit committee chairs covering its perspective on key developments for 2018/19 annual reports.

GC 100 provides guidance to directors on s172

29 Nov 2018

The GC 100 has issued guidance which aims to provide practical help to directors on their performance of the section 172 duty.

FRC publishes year-end advice to preparers in advance of the 2018/19 reporting season

25 Oct 2018

The Financial Reporting Council (FRC) has published a letter to Audit Committee Chairs and Finance Directors, in advance of the 2018/19 reporting season, highlighting changes to reporting requirements and key matters which should be considered in the preparation of forthcoming annual reports and accounts.

FRC publishes findings on the quality of corporate reporting in 2017/2018

24 Oct 2018

The Financial Reporting Council (FRC) has published its Annual Review of Corporate Governance and Reporting 2017/2018, 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 also includes information on the level of compliance with the provisions of the UK Corporate Governance Code (“the Code”) as well as the quality of explanations and reporting provided by companies in their governance statements and committee reports.

FRC Lab report on on business model reporting and risk and viability reporting

18 Oct 2018

A new report from the Financial Reporting Lab of the Financial Reporting Council (FRC) considers how reporting practice has changed since the Lab published its original reports on business model reporting and risk and viability reporting.

Annual report insights 2018 — Surveying FTSE reporting

28 Sep 2018

In this publication we aim to provide insight into practices in annual reporting, focusing on areas where requirements have changed, where regulators are focusing or where innovative practices are emerging.

FRC publishes revised Guidance on the Strategic Report

02 Aug 2018

The Financial Reporting Council (FRC) has published revised Guidance on the Strategic Report encouraging companies to consider wider stakeholders and broader matters that impact performance over the longer term.

New company reporting requirements for private and public companies approved by Parliament

26 Jul 2018

The Companies (Miscellaneous reporting) Regulations 2018 have been approved by Parliament.

Governance in brief — BEIS issues legislation to deliver key corporate governance reforms

20 Jun 2018

The Companies (Miscellaneous Reporting) Regulations 2018 have been laid before Parliament. These represent the legislative strand of the Government’s package of corporate governance reforms announced by BEIS in August 2017.

BEIS issues legislation to deliver key corporate governance reforms on pay and stakeholder engagement

11 Jun 2018

The Companies (Miscellaneous Reporting) Regulations 2018 have been laid before Parliament. These represent the legislative strand of the Government’s package of corporate governance reforms announced by BEIS in August 2017.

Robert Bruce interviews — Paul George, Executive Director, Corporate Governance and Reporting at the Financial Reporting Council

12 Apr 2018

In a wide-ranging video interview Paul George talks to Robert Bruce about the responses to the recent Corporate Governance Code consultation and areas of challenge in governance generally, what the FRC would like to see more of from strategic reports and information on directors’ responsibilities, what it would like to happen with IFRS post-Brexit, and how the Stewardship Code needs to evolve.

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