Press release by ICAEW – Monday 14 March 2016, Collective action is needed if we are to reduce the complexity in corporate reports and make them more meaningful, say auditors. In their Audit Insights: Corporate reporting paper auditors highlight that company reports are still too long which can make it difficult to hold companies to account for their performance.
The report, compiled by auditors from the UK’s largest audit firms and published by ICAEW, is intended to provide a practical guide to improving corporate reporting. It identifies four ways that collective action will improve the situation:
- Companies should only provide meaningful and relevant information that will produce a coherent business story
- The FRC should provide more examples of good practice and reassess their regulations to reduce disclosures and make them more relevant
- Auditors should help companies by producing an informative audit report
- Investors should be more active to influence what is disclosed.
Eamonn McGrath, Chair of ICAEW’s Audit Insights working group on corporate reporting, said: "Many company reports have become too long because of the impact of more rules and regulations for disclosure. Already we are seeing reports that are verging on compliance exercises with less focus on good communication."
The report says the solution is for companies to be ruthless about what they throw out, for auditors to be more challenging, for regulators to support initiatives that allow companies to publish information outside the annual report, and for investors to be clearer about what information they need.
McGrath said: "We are not saying that relevant and meaningful information should not be disclosed. The corporate report need not contain all the wider information but could easily signpost where it is available. The internet has given companies a huge opportunity to offer access to information elsewhere online."