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February 2, 2012

Stakeholders call for simplified, forward looking reports: ACCA study

Corporate reports are weakened by their length and complexity, according to a research by the Association of Chartered Certified Accountants (ACCA).

The ACCA surveyed 500 users of financial reports in the UK, US and Canada. 

Reports are undermined by a lack of focus on forward-facing plans and risk management, complexity, length and too much ‘promotion material’, respondents said.

Nearly half of respondents of respondents said annual reports were too long, 40% said they were too general and 35% said they were too backwards-looking.

Half of respondents admitted there is too much PR talk and 26% said it was difficult to assess a company’s performance. About 35% of the respondents said reports were too complex with 68% of those blaming reporting standards and 61% blaming legal requirements.

Additional information that could add value to reports, according to stakeholders, is information about potential risks that could affect a company’s performance (71%), how the company plans to manage key risks (70%) and social and environmental data (59%).

Annual reports are still considered important as half of respondents use them as their primary source of information about a company.   

“Annual reports can add real value for businesses and investors but, as the survey shows, there are some real issues in today’s reporting. Reports need to be simplified, they need to be written with investors in mind, and they need to be more forward-looking and evidently risk aware,” ACCA head of policy Ian Welch said.

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