FRC: annual reports more than marketing documents
The Financial Reporting Council (FRC) wants company reports to include clear explanations of how directors identify and manage risk, and of “what keeps them awake at night”.
In a set of recommendations aimed at improving the “dialogue” between company boards and their shareholders, the body proposes that annual reports and accounts should be “balanced and fair”, including reports by the chairman and chief executive.
The Council states: “While the best annual reports continue to improve, research by the FRC shows that some companies fall short of fulfilling their Companies Act requirements; of 50 companies studied, a half to two thirds fell short in some areas, including in their reporting of principal risks.”
The watchdog would also like to see a more substantial communication role for Audit Committees, so that they provide fuller reports to shareholders, particularly in relation to the risks faced by the business.
The Council’s chief executive, Stephen Haddrill, comments: “Annual reports are more than marketing documents: they are a vital source of narrative and financial data which are used by shareholders to make investment decisions.”
The FRC is the UK’s independent regulator responsible for promoting high quality corporate governance and reporting.
Category: Financials, Insurance News
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