The Financial Reporting Council (FRC) has published new strategic report guidance to encourage companies to prepare a high quality report. The purpose of the guidance is to help and support companies deliver a report which provides shareholders with a holistic and meaningful picture of an entity’s business model, strategy, development, performance, position and future prospects.
The guidance gives practical guidelines on how the latest legislation can be met. It was created in alignment with the EU Directive on Non-Financial Reporting and the International Integrated Reporting Framework, which is an encouraging development. Currently, those trying to report have to digest the legislation, so the strategic report guidance should make it easier for anyone trying to understand and implement it.
Many people working in the Financial Reporting community won’t have reported on broader non-financial metrics before. Therefore, it’s encouraging that the FRC is proactively trying to help. With this guidance, they now have a steer on the direction that they should take. As a result, the new guidance should help companies to report consistently to their shareholders.
There is also the added advantage that this guidance will make reporting more comparable for all stakeholders, particularly in helping the investor community. By enabling familiarity with the reporting structure and supporting easier comparisons, the FRC’s strategic guidance is providing a clear benefit for investors.
Finally, as well as consistent reporting between organisations, the guidance should help promote clear, concise and material reporting. It is particularly useful that there are examples of this throughout the document.
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