The UK Financial Reporting Council (FRC) has launched a Financial Reporting Lab intended for corporates and investors to develop pragmatic solutions to current reporting needs.
The project aims help enhance the current reporting model that has been criticised by some stakeholders and investors, who said company reports are sometimes leaving them struggling to understand the underlying performance of an entity.
FRC said the participants in the project will be drawn from a diverse range of sectors and will include investors and representatives from a range of companies.
FRC chief executive Steven Haddrill said that the Financial Reporting Lab will present a safe environment where companies and stakeholders can help improve the efficiency of corporate reporting and the project will take a large part of the cost and risk out of the process of innovation and reduces the need for regulatory intervention
“We need to, together, find some good proposals that we [FRC] can make into best practice,” Haddrill said at the launch in London.
One of the supporters of the project and participants is global banking group HSBC and its chief financial officer Russell Picot said UK corporate reporting really matters and it’s in important to be involved in the process of innovation.
“Transparency in financial reports is important as the market does punish you if they don’t understand your information,” he said.
UK government Department for Business, Innovation and Skills director Richard Carter welcomed FRC’s project and said the government is trying to work towards, “removing over-lapping and outdated reporting requirements and make it easier for companies to tell their story”.
“The narrative of a report and the financials should be coherent and not written by different people all together,” he said at today’s launch event.
Disclosure requirements were also a topic broached at the launch with many questioning whether certain parts of the annual report, such as governance and risk management could be moved online.
FRC Financial Reporting Lab director Alison Thomas told The Accountant the incentive is about an environment where people are, “rolling up their sleeves thinking about their annual report, their investor communication and about what makes sense”.
“This is not about coming up with white papers and discussions papers, this is about doing something about the concerns,” she said.
Thomas added there are several companies that have already expressed interest in the project and taking their concerns “to the ‘lab’ and it’s now down to delivering on some of these areas”.