The FRC has identified that the introduction of the Strategic Report and the FRC's Guidance on the Strategic Report has had a positive effect on the quality of corporate reporting.
The FRC has issued a report, Clear & Concise: Developments in Narrative Reporting, which includes practical tools to help companies achieve Clear & Concise reporting and provides an overview of developments in narrative reporting. It also includes a study reviewing the influence of the FRC’s Guidance on the Strategic Report since its publication in 2014, which found that annual reports have become more cohesive, with better linkage between related information and more focus on Clear & Concise reporting.
The study notes that business model and strategy reporting provides useful insight into how a company is managed and that best practice in this area is evolving. It also highlights focus areas for the next reporting period such as the application of materiality and improving reporting of key performance indicators; principal risks; and forward-looking information.
The overriding objective of the strategic report is to provide information for shareholders that will enable them to assess how the directors have performed their duty to promote the success of the company. It should reflect the directors’ view of the company and provide context for the related financial statements. In meeting the needs of shareholders, the information in the annual report may also be of interest to other stakeholders. The annual report should not, however, be seen as a replacement for other forms of reporting addressed to other stakeholders.
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