Academics from the Accounting and Finance division at Alliance MBS have made a major contribution to a study into the future of corporate reporting.
This week the Financial Reporting Council (FRC) published a discussion paper outlining a more agile approach to corporate reporting which challenges existing thinking about how companies can more effectively meet the information needs of investors and other stakeholders.
The report also cites a recommendation made by Chris Humphrey, Professor of Accounting, as part of his work as a member of the advisory board which assisted Sir Donald Brydon’s recent independent review of the quality and effectiveness of audit. Specifically the FRC study cites a recommendation that called for the introduction of Public Interest Statements and Reports.
Dr Chahed said: “The FRC report is pushing the boundaries of conventional thinking in many respects, and the Accounting and Finance division at Alliance MBS can claim significant impact. Professor Humphrey’s Public Interest Statement in the Brydon report features prominently as an inspiration for the proposal of a more comprehensive Public Interest Report.”
Added Professor Quattrone: “The accounting profession and practice are undergoing profound changes and this report comes out at the right moment to shape their future. With the growth of demand for data on various societal and environmental issues, the report plants the seeds for a fruitful debate around future corporate reporting solutions and options.”
The report considers a common criticism that annual reports are too long, and that information can be difficult to access. With companies and society at large facing significant challenges, which have only been heightened by the pandemic, the FRC says stakeholders are ever more interested in companies’ wider actions and the reporting that supports these. Its specific proposals include:
- unbundling the existing purpose, content, and intended audiences of the current annual report by moving to a network of interconnected reports
- a new common set of principles that applies to all types of corporate reporting
- objective-driven reports that accommodate the interests of a wider group of stakeholders, rather than the perceived needs of a single set of users
- embracing the opportunities available through technology to improve the accessibility of corporate reporting
- a model that enables reporting that is flexible and responsive to changing demands and circumstances
FRC Executive Director of Regulatory Standards Mark Babington said: “As the UK’s corporate reporting framework has evolved annual reports have become a vehicle of convenience for ever more information, however this has undermined their purpose and usability. This paper proposes a more agile approach that is responsive to the needs of users of accounts. To build trust in business we need a modern corporate reporting system that is transparent, flexible and puts users of corporate reporting at its heart.” Following a number of high-profile corporate collapses, the government is presently undertaking a string of reviews into the audit sector to increase competition, end conflicts of interest, and improve regulatory oversight.