FRC publishes practical tools to help companies achieve Clear & Concise reporting
17 Dec, 2015
The Financial Reporting Council (FRC) has today issued 'Clear & Concise: Developments in Narrative Reporting. This report includes practical tools to help companies achieve Clear & Concise reporting, as well as a study reviewing the influence of the FRC's Guidance on the Strategic Report on the quality of narrative reporting.
This report is the latest product of the FRC's Clear & Concise initiative, which was launched in June 2014 with the publication of Guidance on the Strategic Report. It is made up of three sections.
- Clear & Concise reporting: The current picture, which looks at what the Clear & Concise initiative is aiming to achieve, including investor and company perspectives.
- Study on the impact of the strategic report, which looks at the findings of a number of other organisations on the quality of UK corporate reporting (including Deloitte's Annual report insights 2015 survey), supplemented by a detailed review of a sample of FTSE 350 companies' strategic reports.
- Emerging developments, which examines the future developments that will impact companies' narrative reports.
Overall, the FRC has found that companies are taking on board the objectives of the FRC's Clear & Concise initiative and the quality of corporate reporting has improved since the introduction of the strategic report, although opportunities for further improvement still exist. Reporting of principal risks, key performance indicators and companies' business models are all specifically highlighted as areas where there is scope to improve. In addition, there is scope for companies to take a longer term view in their strategic reports. Companies could also think about how they can better demonstrate linkage in their reports and how to apply materiality to make reporting more concise and reduce 'boilerplate'.
The report also includes the following tips for companies to consider when looking at how they can achieve Clear & Concise reporting.
- Starting early - this allows more time for discussion of content with internal teams.
- Page count - this can be used as a benchmark when seeking to streamline an annual report.
- Innovation - it can help to start the annual report planning process with a blank sheet of paper to avoid becoming constrained by last year's structure.
- Materiality - the application of materiality to both narrative and financial information is crucial for Clear & Concise reporting.
- Considering the audience - thinking about the information needs of the primary users of the annual report (investors) to ensure that communication is appropriately targeted.
- Collaboration between internal teams - bring together teams from across the organisation to facilitate the identification of linkages between different areas of the report.
- Board-level engagement - Board support for driving innovative improvements is key, and early engagement is critical to achieve this.
- Culture - foster a culture that sees the annual reporting process as a continuous improvement cycle, rather than a one-off process.
The full report and press release can be obtained from the FRC's website.
