Investors left confused by company reports: GT
Mid tier firm wants to see cut in regulation
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