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Making financial reports less complex and more relevant

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04 Jun 2009

The Financial Reporting Council (FRC), the United Kingdom's independent financial reporting regulator, has published a discussion paper arising from its project on reducing complexity in corporate reporting.

The paper – titled Louder than Words: Principles and Actions for Making Corporate Reports Less Complex and More Relevantseeks to address growing concerns about the complexity of corporate reporting. The paper recommends eight guiding principles for reducing complexity: four for better communication in reports and four for improving the quality and effectiveness of regulations. The paper also makes five calls for action where the FRC believes further investigation may lead to opportunities for reducing complexity. These are:
  1. Cash flow and net debt reporting: could this be better aligned with user needs such as by including a net debt reconciliation?
  2. Wholly owned subsidiaries reporting requirements: could we find ways to reduce the reporting burden such as by reducing the filing or disclosure requirements?
  3. Cut clutter: could preparers reduce immaterial information (with the support of regulators) that may be undermining the quality of reports?
  4. Disclosures: could we overhaul the process for creating disclosures and provide guidance about when they can be deleted as not relevant?
  5. IFRSs: could we improve usability through logical organisation and clearer articulation of the desired outcomes for each standard?
The FRC is hoping that the discussion paper will lead to debate within the UK and global financial reporting communities. The FRC has invited comments on its paper from a wide range of constituents by 30 October 2009. Click to download (copyright FRC and posted on IAS Plus with their kind permission):

 

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