New year, new reporting regulations: What we’ve seen so far
The new regulatory requirements introduced in October 2013 have so far had limited impact on the quality of corporate reporting, but they have definitely made boards much more engaged with corporate reporting and most have revisited their year-end reporting processes.
Our briefing looks at how the first adopters of the new regulations have responded, to give insight and ideas to those yet to report.
What have we seen so far?
- The new remuneration reports are significantly longer and have demanded the most time and effort from preparers.
- There has been limited change so far as a result of the introduction of the strategic report, other than to add the specific new disclosures and re-order existing content.
- The major benefit of the regulatory changes has been the increased engagement of preparers and boards with the reporting process, driven by the fair, balanced and understandable statement.
What do we hope to see going forward?
We hope that this greater focus from boards and the principles in the final implementation guidance from the Financial Reporting Council (FRC), due in April, will result in:
- Greater innovation.
- More focus in the strategic report on what is material, with other content placed elsewhere.
- Clearer links between the business model, strategy disclosures, performance (KPIs) and pay.
- Better integration of the specific new disclosures with the rest of the annual report.
- 100% technical compliance with new regulations, though less change in substance.
- Length of the average remuneration report has increased from 11 to 17 pages.
- Average length of strategic report is 39 pages, compared to 37 pages for the equivalent content before.
- Average number of significant issues reported by the audit committee is four to five; 70% of companies included impairment reviews of goodwill and 40% provisioning.
- 30% of companies set out details of the process used to support the directors’ ‘fair, balanced and understandable’ statement.
If you’d like to know more about our analysis, download the full briefing.