The Financial Reporting Council has launched a project to review the complexity and relevance of current company reporting requirements.

The increasing size and complexity of company reports has become a subject of growing concern among investors, accountants, auditors and others with an interest in clear and relevant corporate reporting. Yet, attempts to date to simplify or streamline reporting requirements have often been met with stiff resistance from one or more groups of stakeholders.

Ian Wright, the FRC’s Director of Corporate Reporting, and head of the project, says:

“We need to offer a vision of less complexity that stakeholders support so we can begin to move in the right direction.”

The FRC, the UK’s independent regulator responsible for promoting confidence in corporate reporting and governance, has identified the complexity issue as one of the more serious threats to confidence.

Following consultation with stakeholders earlier this year, the FRC has set up a project “to address the risk that corporate reporting requirements, and related influential guidance, are contributing to the increasing complexity of reports without making them more useful or understandable.” The scope of the project includes requirements relating to financial statements, accompanying management commentary and other reports.

Ian Wright says: “As a first goal, we would like to understand the causes of complexity in corporate reporting and engage the community in a debate about how to stop complexity increasing further. To achieve this we need to understand the different perspectives of finance teams, directors, investors and analysts – what is it they find complex in what they do?”

The project team is initially seeking input from anyone who has suggestions about how to address the problem, and welcomes comments from all quarters. The team has an extensive consultation programme with key groups and individuals who prepare, present and read corporate reports.

The project team aims to publish a Discussion Paper later this year.

The project is being supported by a Complexity Advisory Panel – a group of senior executives experienced in the world of preparing, communicating and analysing corporate information – which held its first meeting on Tuesday, 15 July.

Ian Mackintosh, Chairman of the Advisory Panel, says:

“The purpose of the panel is to advise on strategy and to ensure that the team produces something that is easy to read, easy to understand and commands widespread support”

1. The Financial Reporting Council (FRC) is the UK’s independent regulator responsible for promoting confidence in corporate reporting and governance.
2. The FRC’s functions are exercised principally by its operating bodies (the Accounting Standards Board, the Auditing Practices Board, the Board for Actuarial Standards, the Financial Reporting Review Panel, the Professional Oversight Board and the Accountancy and Actuarial Discipline Board) and by the Board. The Committee on Corporate Governance assists the Board in its work on corporate governance. 
3. The members of the Complexity Advisory Panel are:

   Ian Mackintosh, (Chairman) Accounting Standards Board.
   Charles Tilley, Chief Executive, CIMA
   Guy Ashton, Global Head of Company Research, Deutsche Bank
   Guy Elliott, Finance Director, Rio Tinto
   Jennifer Walmsley, Associate Director, Hermes Equity Ownership Services
   Jonathan Hayward, Director, Independent Audit Limited
   John Coombe, Chairman, Hogg Robinson Group
   Miles Gietzmann, Professor, CASS Business School
   Richard Aitken-Davies, President, ACCA
   Teresa Graham, Independent consultant

4. Press enquires should be directed to Ian Rodger, telephone 020 7492 2395, email i.rodger@frc.org.uk