In early September, the Department for Business, Innovation, Science and Trade (BIST) published a consultation paper outlining proposed reforms to corporate reporting.
The reforms are intended to reduce the administrative burden associated with reporting by removing duplication and simplifying complex requirements.
Instead, companies will streamline their reports to focus on the information that is financially material1 and decision-useful for investors and creditors – in other words, less box-ticking, more judgement and explanation.
This pivot will support narrative conviction, transparency and investment by allowing companies to re-focus their reports and their stories to specific stakeholder groups rather than a more general audience.
The structure of the paper
The paper is centred around 5 key principles:
- Clarity of purpose – All information that is not financially material or ‘decision-useful’ to investors and creditors is to be removed.
- Flexibility and trust – Companies should be trusted to tell their own story and to tailor disclosures to the needs of their investors and creditors.
- Simplicity and coherence – Duplication across various reporting and accounting standards is to be removed.
- Proportionality – Reporting requirements are to be relative to company size, ownership and structure.
- Fit for the future – The UK’s legal framework needs to be able to adapt to the changing world economy and should be geared to take advantage of emerging opportunities.