The Association of Chartered Certified
Accountants (ACCA) has said it supports a reform of the directors’
report proposed in a narrative reporting consultation from the
Department of Business, Innovation and Skills (BIS).

The ACCA thinks replacing the current business
review and director’s report with a strategic report and annual
directors’ statement will ensure that narrative reporting focuses
on the markets while engaging investors and stakeholders.

The ACCA said this replacement of the
director’s report means that compliance related disclosures will be
separated from the coherent, strategic narrative of the

The professional body also thinks the annual
directors’ statement should have clear basis and not include ad-hoc
disclosures as currently permitted.

Recent ACCA studies on narrative reporting
confirmed that companies should be able to communicate their own
‘story’ to stakeholders and mandatory disclosures that do not add
value to users should be rejected.

The ACCA considers that any changes made
should account for global developments in reporting to prevent any

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ACCA head of technical John Davies said this
project offers an important opportunity to ensure companies
“prepare and publish information which helps to facilitate
constructive company-investor engagement and to encourage both
sides to address the wider issue of long-term focus”.