Narrative reporting - a never ending story
Research from the ACCA and Deloitte out today suggests that CFOs are unhappy with narrative reporting wanting more discretion in what it means and less regulatory prescription.
The research is deliberately timed because government currently has a review underway looking at this very issue.
On the one hand government wants to have the very best narrative reporting regime around, as well as reintroducing an operating and financial review (the policy arbitrarily killed off by Gordon Brown in 2005 as a means of keeping Sir Digby Jones happy when he was running the CBI). On the other government seems aware that the reporting demands only ever grow and there’s a question mark about over whether much of it is being used by stakeholders.
For my part I can’t help feeling that many company use their narrative to talk up the good and either brazenly gloss over the bad or at best simply downplay it. And this is the unspoken risk in granting companies more discretion – the reports simply become conduits for good news.
And it is that risk that I suspect really gets on the nerves of stakeholders and why there is always pressure to regulate reporting.