The UK Financial Reporting Council (FRC) has published a guidance report for consultation on the requirements of the strategic report introduced by recent amendments to the UK Companies Act 2006.

The FRC said the guidance aims also at encouraging companies to be more innovative in the drafting of their annual reports in order to present narrative information to investors in a more concise and understandable way.

"We hope that our proposed guidance will act as a catalyst for companies to publish more relevant narrative reports, facilitatingcommunication and engagement with investors," FRC executive director codes and standards Melanie McLaren said.

The International Integrated Reporting Council (IIRC) issued a statement welcoming the proposed guidance.

IIRC chief executive Paul Druckman highlighted the connection between the principles of integrated reporting and the strategic report introduced by UK financial reporting regulations.

"They are in fact complementary. As the guidance states, integrated reporting and the strategic report share ‘similar qualitative characteristics and content’. I hope that businesses will find the principles of integrated reporting helpful in preparing their strategic report," Druckman said.

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The Institute of Charetered Accountants in England and Wales (ICAEW) also welcome the development. However, ICAEW financial reporting faculty head Nigel Sleigh-Johnson said:

"Many companies may struggle with implementing the new requirements, especially on reporting on human rights policies. Thus […] we urge the FRC to finalise that guidance as […] the new narrative reporting requirements become effective from 1 October 2013 and apply to September 2013 year ends."

The deadline to comment on FRC’s consultation is 15 November.

The International Integrated Reporting Council