Quality of corporate reporting still poor
Improvement requires a fuller understanding of purpose, according to new study
A significant proportion of companies aren't communicating effectively with their investors through their annual reports, new researched revealed.
Stakeholders want to encourage progress on the quality of corporate reporting because although many public companies understand improved reporting offers benefits, many continue to apply a tick box approach to reporting, according to consultants Black Sun.
Narrative reporting should be used more effectively so businesses are able to “tell their story better” when it comes to governance, remuneration and sustainability, the latest report said.
Black Sun recommends establishing a corporate reporting framework that offers clarity on the link between a company’s strategy, performance and risks.
Director of research and strategy Saillie Pilot said: “The key to improvement is to demonstrate the business benefits of reporting to those responsible for the business so that they grasp the opportunity to tell their story clearly, relevantly and succinctly.
“Whilst many companies understand this, our research shows many companies do not. At the moment only around one in five FTSE Plc boards are fully engaged in the preparation of their annual report, and only one in 20 FTSE 100 chairmen are reporting personally on board effectiveness and governance.”
KPMG recently urged businesses to improve their reporting practices partly on the basis that improved communication on risks can give CFOs an advantage when it comes to raising capital.
Read also - Ben Griffths CFO World blog on annual reports.
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