The Financial Reporting Council published a consultation paper in January 2011 entitled "Effective Company Stewardship" which covers a range of financial reporting, auditing and corporate governance issues for listed companies with the aim of improving the quality of annual reports and accounts.
The FRC proposes that directors should take full responsibility for the annual report viewed as a whole and that the audit committee should provide fuller reports in relation to the integrity of the annual report and oversight of the external auditors. It also suggests that investors should have the right to be more involved in the auditor appointment process. There is a suggestion that the requirement for companies to publish paper copies of the annual report and accounts could eventually be abandoned in favour of on-line access. The FRC advocates the use of XBRL (eXtensible Business Reporting Language) as the new technology to make annual reports and accounts more searchable.
The consultation closed at the end of March. The consultation paper is available on the FRC website.
The Accounting Standards Board, an operating body of the FRC, has separately published a report called "Cutting Clutter: Combating clutter in annual reports". In the report, the ASB looks at how annual reports can be made simpler and more manageable. It identifies immaterial disclosures and explanatory information which remains the same year to year as two problem areas. The report considers the behavioural influences which act against a drive to cut clutter and sets out steps it believes could help companies produce less cluttered annual reports.
The ASB has also provided analysis and suggestions to help companies when drafting three key areas of the annual report which it says commonly contain clutter: the corporate governance statement; accounting policies disclosures; and details of share-based payment schemes.
The ASB welcomes views on the issues and ideas presented in the report by 30 September 2011. The ASB report is available on the FRC website.