Financial Reporting Council highlights key areas for improvement in Annual Reports for 2017/18…
10 October 2017
By Steph Osborn
Ahead of the 2017/18 reporting season, the Financial Reporting Council (FRC) has identified key areas where companies should aim to improve, highlighting changes in UK reporting requirements.
These have been communicated today in a letter sent to audit committee chairs and finance directors.
With the aim of concentrating on specific areas of investor concern, the FRC also reiterated the importance of the annual report in providing “an opportunity to communicate key information to investors about the company’s performance, strategy and future prospects.”
The letter goes on to emphasise that it is important that the annual report is “presented in a user-friendly, clear and concise manner.”
Below are the areas that were specifically highlighted in the letter.
New accounting standards
This refers to the implementation of three new international accounting standards relating to financial instruments, recognising revenue from contracts with customers and leases.
Now firmly recognised as a significant part of corporate reporting, its quality can be further improved by explaining the linkages and relationships between pieces of information. Good practice is for boards to use the strategic report to tell their story most effectively, again highlighting the importance of utilising strong corporate communications.
The recent implementation of the EU Directive on Non-Financial Reporting places a greater emphasis on the environment, employees, social matters, respect for human rights, and on countering corruption and bribery issues.
In addition, the FRC is about to embark on a fundamental review of the UK Corporate Governance Code, in line with the Government’s evolving agenda for corporate governance reform.
Financial statement disclosures
This focuses on disclosure requirements for cashflows, dividends, accounting policies and critical judgments or estimates.
Steph Osborn is a business analyst at Invicomm