Investors left confused by company reports: GT

Investors are alienated and confused by company reports according to a mid tier auditor which wants to axe the amount regulation and complexity in annual reports.

Accounting firm Grant Thornton (GT) wants the UK’s reporting regulator, the Financial Reporting Council (FRC), to confront the international accounting rule maker over the complexity of corporate reporting.

The FRC also wants to reduce the complexity in company reporting, and has asked for suggestions on how regulations could be redrafted. The submission period closed today.

Steve Maslin, GT partnership oversight board chair, in his submission to the FRC said businesses should be encouraged to provide investors with useful and accessible financial information.

"The complexity of the current reporting framework is not conducive to companies from being more open with investors,” he said.

“Investors frequently tell us that annual reports are poorly structured; the complexity and volume of information often obscures key messages; and management fails to tell the story because it does not put financial information in the context of business strategy and targets to measure implementation of that strategy.”

He said companies “all too often” make statements which serve to minimise litigation risks and investor criticism.

"We need a re-think on how to bring together a body of authoritative market participants who can help, not hinder, a framework which enables investors and other users to get to the key information they need straight away", he said.

Further reading: Annual reports slated for clutter and lack of clarity