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We comment on the FRC's Exposure Draft: Guidance on the Strategic Report

  • Exposure Draft Guidance on the Strategic Report Nov 13 Image

20 Nov 2013

We have published our comment letter on the Financial Reporting Council's (FRC) Exposure Draft: Guidance on the Strategic Report, which sets out detailed guidance for companies preparing a strategic report in compliance with the revised narrative reporting regulations issued by the United Kingdom Department for Business, Innovation and Skills (BIS). These are effective for periods ending on or after 30 September 2013. We support the FRC's proposed guidance but also highlight a number of ways in which it can be improved.

Our key comments include:

  • We believe it would be helpful to users if the guidance clearly highlighted those requirements that apply only to quoted companies and clearly distinguishes between those items which are requirements of the law and those which are best practice recommendations.
  • In our opinion the guidance in respect of environmental matters, employees and social, community and human rights issues is rather brief compared to many of the content elements. Whilst for some companies meeting these requirements is just a statutory compliance exercise, for other reporters the issues will be fundamental to the business and the risks inherent in it. It would therefore be helpful if further guidance could be provided, particularly in respect of the newly introduced requirements such as human rights disclosures and employee gender balance.
  • There is no mention of the option to send the ‘strategic report and supplementary information’ to shareholders as a standalone document. Specific guidance should be included for those companies intending to take advantage of this.

Further comments and a full response to all questions raised in the invitation to comment are contained within the full comment letter.

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