FRC thought leadership on disclosures to improve financial reporting receives broad support
News types: Codes and Standards Announcements, Consultation Announcement, Publications, Response
Published: 26 June 2013
The FRC has today issued feedback on its discussion paper ‘Thinking about disclosures in a broader context’ (PDF). In October 2012, the FRC published a discussion paper setting out a roadmap for a disclosure framework designed to encourage more relevant financial reporting including beyond the confines of the financial statements. There was broad support for FRC‘s suggestions that:
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Improving disclosure should be a shared responsibility between preparers, regulators, auditors and users
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The main end-users of reports are investors and disclosures should be framed with that in mind, having regard to communication, relevance and materiality.
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There should be a move away from piecemeal approach to disclosures by standard setters and regulators and that a framework would provide a benchmark for measuring suggested disclosures.
“We were pleased to see so many positive responses to our discussion paper “Thinking about disclosures in a broader context”. It is clear that there is a will to tackle the level of “clutter” in financial reports and that establishing clear principles against which to measure proposed disclosures is seen as being helpful.
There was particularly strong support for an increasing focus on relevance to investors as providers of risk capital. Voluminous disclosure may be given in the interests of transparency but may in fact introduce opaqueness. Respondents emphasised the need for international coordination and so we are pleased that the International Accounting Standards Board has said that it will look at disclosures as part of its current important review of its conceptual framework for financial reporting.
We will be taking forward our thinking at a practical level through projects in the Financial Reporting Lab and in developing our narrative reporting guidance”
Notes to editors:
- The FRC is responsible for promoting high quality corporate governance and reporting to foster investment. We set the UK Corporate Governance and Stewardship Codes as well as UK standards for accounting, auditing and actuarial work. We represent UK interests in international standard-setting. We also monitor and take action to promote the quality of corporate reporting and auditing. We operate independent disciplinary arrangements for accountants and actuaries; and oversee the regulatory activities of the accountancy and actuarial professional bodies.
- Read or download the feedback statement and the discussion paper.
- Information about the Financial Reporting Lab’s projects on accounting policies and case studies on “cutting clutter” can be found here.