Efforts to simplify Britain's complex financial reporting environment continued this week with guidance to help companies “cut the clutter” from their annual reports.
The Accounting Standards Board, part of the Financial Reporting Council, said its report, “Cutting Clutter: Combating Clutter in Annual Reports,” would give companies practical aids for reducing and simplifying their disclosures.
It follows last month's pledge from the government to make the narrative reporting rules that U.K.-listed companies are expected to comply with “clearer and more focused.”
The ASB report said, “Clutter in annual reports is a problem, obscuring relevant information and making it harder for users to find the salient points about the performance of the business and its prospects for long-term success.”
To fix the problem, companies needed to prepare their accounts in a different way, aiming to reduce clutter right from the start of the planning process, rather than looking to see what they could rub out at the end.
But the ASB stressed that regulators, standard setters, and investors all had a part to play, if reporting is to be simplified.
ASB chairman Roger Marshall said, “Improving financial reporting is not just about issuing standards. We want to encourage a change in behaviors, where annual reports are clear and clutter-free, focusing on the disclosures that really aid an understanding of the business and its long-term prospects.”