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July 20, 2011

Financial statements need to be shorter

Companies’ financial statements should be cut by 30%, according to research carried out by the Institute of Chartered Accountants of Scotland (ICAS) and the New Zealand Institute of Chartered Accountants (NZICA).

The ICAS and NZICA research, commissioned by the International Accounting Standards Board, found more focused information would lead to a greater understanding of the financial performance of leading companies.

According to the report, there is a growing concern amongst the financial community, including amongst investors, about the increasing size of annual reports. Annual reports have risen by 44% from 2005 to 2010 for UK listed companies.

 “We have carried out a massive spring cleaning exercise, throwing out those disclosure requirements which simply add clutter to the financial statements,” Deloitte UK senior partner Isobel Sharp said.

Past president of the NZICA Tony Frankham stated that “the recommendations now deserve the support of those involved in the various jurisdictions internationally in preparing, auditing, issuing and using financial reports in every country using in IFRS.”

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