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Deloitte UK survey of narrative reporting

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20 Oct 2009

Deloitte United Kingdom has published A Telling Performance – Surveying Narrative Reporting in Annual Reports.

The survey analyses the narrative reporting of 130 UK listed companies, split into two categories – investment trusts and other companies. It includes a review of:
  • how compliance with the disclosure requirements of the Companies Act 2006, the Listing Rules, the Disclosure and Transparency Rules, and the Combined Code varied;
  • the extent to which companies have adopted the Financial Reporting Council's November 2008 guidance on going concern. In this respect its publication is timely as the FRC has published recently its revised guidance, which will be effective for 31 December 2009 period ends; and
  • the use of the ASB's Reporting Statement: Operating and Financial Review.

The main findings for companies other than investment trusts are:

  • the length of the annual report has increased by 3% compared with 2008 and by 41% compared with 2005.
  • 62% of those companies that reported after the November 2008 FRC Update on going concern and liquidity risk was published clearly took on board voluntarily the guidance therein.
  • nine companies (2008: five) had received modified audit reports, seven (2008: four) of which related to group going concern. Another one related to a subsidiary going into administration post year-end;
  • three areas saw dramatic increases compared with 2008:
    • 83% (2008: 47%) discussed their capital structure and financing
    • 68% (2008: 48%) discussed treasury policies
    • 47% (2008: 22%) discussed their current and prospective liquidity
  • 96% of companies (2008: 89%) clearly described their principal risks and uncertainties. Companies
  • disclosed eight risks on average, with one FTSE 350 company identifying 30. The state of the economy was the most commonly noted risk;
  • 84% of companies (2008: 77%) identified clearly their key performance indicators.

Click for A Telling Performance – Surveying Narrative Reporting in Annual Reports (PDF 4,325k).

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