ICAEW responds to BIS proposals regarding implementation of the EU Non-Financial Reporting Directive

  • ICAEW (Institute of Chartered Accountants in England and Wales) (lt green) Image

16 May, 2016

The Institute of Chartered Accountants in England and Wales (ICAEW) has issued its comment letter to the Department for Business Innovation and Skills’ (BIS) call for views on effective reporting alongside proposals to implement EU requirements relating to the Non-Financial Reporting Directive (NFR Directive).

BIS’ consultation document, ‘Call for views on effective reporting alongside proposals to implement EU requirements’, was issued in February 2016. In its comment letter, the ICAEW “commend BIS’s work in this area” however caution that “unnecessary or overly-frequent change is unhelpful for users and preparers, who prefer a strong degree of continuity and consistency in reporting.” The ICAEW’s principal recommendation is “the adoption of an approach to disclosure based consistently on an ‘to the extent necessary’ formulation” in order to avoid the inclusion of boilerplate information on non-financial reporting matters in the annual report. The ICAEW believe that there are no major obstacles preventing UK implentation of the Directive and favour an implementation approach “which maintains and builds on the existing UK narrative reporting regime.” In achieving the latter objective, the ICAEW suggest the following:

  • amending the existing strategic report requirements for quoted companies to comply with the requirements of the NFR Directive; and
  • extending those amended strategic report requirements to any entities that, while not quoted, are large undertakings and public-interest entities (PIEs) that have an average of more than 500 employees.

The ICAEW expresses concerns about the use of NFR Directive terminology in the BIS consultation document as this is likely to result in confusion within the UK, e.g. the reference to a ‘non-financial statement’. It also highlights that currently the Directive only applies to certain PIEs and recommend that BIS clarify the type of companies within the scope of the revised regime when it publishes its proposed amendments.

The full comment letter is available on the ICAEW website.

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