The complexity and relevance of current company reporting
requirements will be investigated by the UK Financial Reporting
The regulator launched the project following growing concern
from investors, accountants, auditors and other stakeholders over
the increasing size and complexity of company reports.
The scope of the project will include requirements relating to
financial statements, accompanying management commentary and other
A project team and advisory panel have been established. Ian
Wright, the FRC director of corporate reporting, will lead the
project and UK Accounting Standards Board chair Ian Mackintosh will
chair the advisory panel.
One of the project’s primary aims is to identify the causes of
complexity. While Mackintosh does not have any initial suggestions,
he told The Accountant the FRC has been carefully
monitoring the US Security and Exchange Commission’s (SEC) advisory
committee on improvements to financial reporting, which is due to
produce its final report next month.
The draft final report has made five recommendations, including
increasing the usefulness of information in SEC reports,
delineating authoritative interpretive guidance and clarifying
guidance on financial restatements and accounting judgments.
Mackenzie has already met with the US committee’s chair, Robert
Pozen, and the FRC will discuss the US regulator’s findings with
them when they are released. The UK group plans to work with other
national standard setters and regulators too.
According to the FRC, attempts to simplify or streamline
reporting requirements have often been resisted by some
“Everybody says they want simple things and they want
principles-based standards, but when you come to do it you get
people say ‘we need more guidance and we need more help on this and
that’. Then they bring up all sorts of exceptions to the rule… so
it’s a continuing battle to keep complexity down,” Mackenzie
The project team is seeking input and suggestions. A discussion
paper is due to be published later this year.