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According to a recent ACCA (the Association of Chartered Certified Accountants) survey, the value of corporate reports is stifled by confusion over their different audiences, complexity and a lack of timeliness.
Although the survey suggests that the importance of Annual Reports has not diminished in the eyes of investors and stakeholders, and that they have in fact become more important, it also finds that reports could be much better than they currently are.
ACCA key findings
The ACCA report – Re-assessing the value of corporate reporting – surveyed 500 corporate reporting stakeholders throughout the UK, US and Canada, finding that:
– 50% of respondents agreed that the annual report is the primary source of information about a company
– 47% of respondents said reports are too long
– 48% felt too much promotional material is creeping into content, with 40% suggesting reports are too general in purpose
– 35% agreed that reports are too complex (68% blamed reporting standards for this, and 61% blamed legal requirements)
As the ACCA conclude, reports need to be simplified, more forward-looking and evidently risk aware. The survey’s results also suggest reports need to be written with investors in mind. The findings, particularly the latter, are understandable – financial performance is so high on the agenda in these tough economic times but social and environmental information should not be forgotten. ACCA’s head of policy, Ian Welch, suggests that integrated reporting could be a way of reviving the value of social and environmental information, and we'd most definitely agree.