BIS: Simpler reports for better business
The Department for Business says simpler company reports will support investors and the economy
THE GOVERNMENT has called for simpler financial reporting in a new paper by the Department for Business, Innovation and Skills.
Providing clear and relevant information to investors is the focus and performance and pay will be in the spotlight.
BIS hopes the consultation will lead to improved transparency and accountability, helping shareholders to “get a real picture of what is happening to inform their investment decisions and help our economy grow”.
Stakeholders have until 25 November to comment on The Future of Narrative Reporting, and top earners’ pay is one of the focal issues.
Proposals include a requirement to publish the link between company performance and executive earnings, give total figures for directors’ remuneration and lay bare the ratio between chief executives’ pay and company median earnings.
BIS plans to spilt narrative reports in two, creating a strategic report of key commercial data and an online Annual Director’s Statement containing background information.
Business secretary Vince Cable (pictured) said annual reports stretching to 100 pages and more have become “unwieldy, complex and hard to understand”.
“Changing the way companies do their annual reports will provide investors with better information on how well businesses are performing and what their directors are being paid, increase transparency and reduce the burden on business freeing them up to concentrate on growing and focusing on the long-term,” he concluded.
The paper comes shortly after a joint project by ICAS and the New Zealand Institute of Chartered Accountants, Losing the Excess Baggage – reducing disclosures in financial statements to what’s important, which concluded financial statements could be cut by up to 30%.
