FRC guidance should lead to greater innovation in UK corporate reporting practice, says IIRC
(15 AUGUST 2013) – A corporate reporting landscape that achieves concise, relevant and focused information about the strategy, governance, performance and prospects of a business to support investor decision-making is the shared goal of the International Integrated Reporting Council (IIRC) and the UK’s Financial Reporting Council (FRC). Draft guidance, issued by the FRC today, brings that goal a step closer to being achieved. The draft guidance will underpin the new regulations on narrative reporting that come into force for financial years ending on or after 30 September 2013 for UK listed companies.
Paul Druckman, Chief Executive Officer of the IIRC, said: “I welcome the FRC’s encouragement of innovation and experimentation in reporting, which should support a shift in the mind-set of a business away from rigid compliance, and towards the better communication of its individual value creation story for its providers of financial capital. There is of course more to do, in terms of articulating a common vision, a clearer roadmap for businesses to follow and, perhaps, more clarity around the definitions of key terms. But are we moving in the right direction? Yes, absolutely.
“The Strategic Report has its roots in the UK Companies Act. Integrated Reporting is an international, market-led initiative. They are in fact complementary. As the guidance states, Integrated Reporting and the Strategic Report share ‘similar qualitative characteristics and content’. I hope that businesses will find the principles of Integrated Reporting helpful in preparing their Strategic Report. IIRC Pilot Programme businesses in the UK have already commented to me that they will use the Strategic Report as an accelerator to speed up their journey to full Integrated Reporting.”
While it is the IIRC’s vision that Integrated Reporting <IR> will evolve to become the long-term global corporate reporting norm for businesses in the future, the IIRC believes that today’s draft guidance represents an important stepping stone towards greater alignment between the objectives of high quality, relevant corporate reporting, and the means by which this can be achieved, offering the potential for greater clarity for businesses and investors.
NOTES TO EDITORS:
1. The International Integrated Reporting Council (IIRC) is a global coalition of regulators, investors, companies, standard setters, the accounting profession and NGOs. Together, this coalition shares the view that corporate reporting needs to evolve to provide a concise communication about how an organisation’s strategy, governance, performance and prospects, in the context of its external environment, lead to the creation of value over the short, medium and long term.
2. A link to the draft FRC Guidance on the Strategic Report can be found here.
3. Michael Nugent, IIRC Technical Director, was a member of the FRC’s Narrative Reporting Advisory Group from January-July 2013.
4. Please direct media enquiries to Jonathan Labrey (+44 (0) 207 504 2581;jonathan.labrey@theiirc.