BusinessCorporate FinanceBDO: Annual report users question value

BDO: Annual report users question value

Users of annual reports fear the documents are not reliable performance indicators, but rely on them nonetheless

ONLY HALF of finance directors view annual reports as reliable performance markers, yet almost 90% still rely on them to guide investment decisions.

A report by BDO shows 51% of finance directors consider them a good indication of commercial standing, with 56% of non-executive directors and fund managers saying the same thing.

Nevertheless, 87% of fund managers and 84% of NEDs said annual reports are either “the most important” or “a major element” of their investment decision path.

BDO’s survey also concluded board members are “underestimating the importance that the investor community places on the annual report”, and said disagreement lingers over the amount of assurance that should go into the narrative section.

The findings come shortly after a Financial Reporting Council paper aimed at boosting transparency in annual reports, which the regulator said will improve accountability.

It called upon boards to focus on strategic risks and avoid cluttering annual reports with minor concerns that obscure the bigger picture.

BDO partner James Roberts commented: ‘”With the economic recovery struggling to gather momentum, the need for investment is even more acute, so non-executive directors must become alive to the demands of the modern investment community.”

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