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“removing over-lapping and outdated reporting requirements and make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”.
