ICAS: 30% of financial reports must go
ICAS and New Zealand peer NZICA said financial reports should shed 30% to improve communication with users
FINANCIAL REPORTS should shed 30% of their bulk in order to improve shareholder communication, according to a report by ICAS and New Zealand institute the NZICA.
The joint working party said that swathes of financial data are “hindering, not helping”, describing it as “excess baggage” that deflects attention from the issues that really matter.
Co-chair Isobel Sharp (pictured) of Deloitte called it a “massive spring cleaning exercise…helping preparers be bolder in deleting details which are simply not important to readers of their financial statements”.
Companies tempted to pack in irrelevant information could see costs rising and risk obfuscating the essentials, making it harder for users to interpret financial reports.
However, investors might not agree. Representative body the CFA Institute questioned the importance of cutting clutter in financial statements, saying that too much focus on streamlining comes at the expense of integrating components and improving their quality.