BIS consultation: a more strategic and flexible framework
Changes to the narrative reporting framework are needed and there’s growing momentum for action – that’s the consensus view revealed in the summary of responses to the UK government consultation on a new reporting framework.
As the summary says, “Preparers and users want it to be easier to draw out strategic company information from the increasing volume of published company data.”
On the face of it, the proposed changes by the Department of Business Innovation and Skills seem little more than a ‘shuffling of the deck’. But scratch below the surface and leading reporters are recognising its potential to:
- Move the focus of attention from compliance to communication
- Reduce clutter and create a more dynamic narrative that focuses on what matters strategically and what’s changed during the year
- Leverage the on-line space better – eg, for standing data and other statutory information
- Speed up the reporting process – eg, release the Strategy Report with the preliminary results
- Challenge the quality and availability of information for internal decision-making
The direction of travel for reporting is clearly towards a more flexible reporting framework that allows companies to tell an integrated story that’s grounded in their business model and strategy. Boilerplate disclosures can then be reported separately and not allowed to cloud the key messages.
There’s no doubt that presenting a clear, concise and strategically-focused picture of a business is a challenge. You only have to look at the evidence in our review of companies’ narrative reporting practices – From compliance to competitive edge. But, as you may have gathered already, I am a firm believer this is the way reporting needs to go if it is to remain relevant.
The detail of the proposals for a strategic report will be developed with stakeholders, including PwC, over the coming months. New legislation is likely to be published in October this year and is expected to come into effect in April 2013.
So what’s the first step? BIS is hosting some workshops, which we are pleased to be contributing to, along with preparers, users of reporting and other key stakeholders. The aim is to help clarify the detail of the strategic report and establish the breadth of information that should go into the Annual Directors’ Statement.
We’re now in a period of challenge and change that has the potential to transform corporate reporting over the next decade. The BIS consultation is just one of many important initiatives and I look forward to keeping you posted on developments as they arise.