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Complexity and relevance of current company reporting requirements under review.
The project will be conducted by, The Financial Reporting Council (FRC).
According to the FRC, “the increasing size and complexity of company reports has become a subject of growing concern among investors, accountants, auditors and others with an interest in clear and relevant corporate reporting.”
Yet any attempts to simplify or streamline reporting requirements have often been met with stiff resistance from one or more groups of stakeholders.
Ian Wright, the FRC’s Director of Corporate Reporting, and head of the project, says: “We need to offer a vision of less complexity that stakeholders support so we can begin to move in the right direction.”
The FRC, the UK’s independent regulator responsible for promoting confidence in corporate reporting and governance, has identified the complexity issue as one of the more serious threats to confidence.
Following consultation with stakeholders earlier this year, the FRC has set up a project “to address the risk that corporate reporting requirements, and related influential guidance, are contributing to the increasing complexity of reports without making them more useful or understandable,” says Wright.
The scope of the project includes requirements relating to financial statements, accompanying management commentary and other reports.
The first goal of the project will be to understand the causes of complexity in corporate reporting and engage the community in a debate about how to stop complexity increasing further.
Wright says to achieve this there is a need to understand the different perspectives of finance teams, directors, investors and analysts, and what it is they find complex in what they do. Project team The project team is initially seeking input from anyone who has suggestions about how to address the problem, and welcomes comments from all quarters. The team has an extensive consultation programme with key groups and individuals who prepare, present and read corporate reports.
The project team aims to publish a Discussion Paper later this year.
The project is being supported by a Complexity Advisory Panel – a group of senior executives experienced in the world of preparing, communicating and analysing corporate information – which held its first meeting on Tuesday, 15 July.
Ian Mackintosh, Chairman of the Advisory Panel says, “the purpose of the panel is to advise on strategy and to ensure that the team produces something that is easy to read, easy to understand and commands widespread support.” Related articles Related links |
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