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Standards & GuidanceForward-looking information lacking in narrative reporting
UK companies are failing to provide sufficient forward-looking information, the Accounting Standards Board's (ASB’s) review of narrative reporting in 2006 has found. The review looked both at compliance in respect of the business review requirements, and best practice by judging companies against the ASB’s reporting statement on the operating and financial review.
It also found that companies need to do more to provide information on intangible factors such as brand strength and corporate reputation. While noting an increase in companies reporting on environmental, employee and social issues, the report found very few discuss their contractual arrangements and relationships in depth.
However, the ASB suggested the “safe harbour” provisions in the new Companies Act may encourage companies to provide clearer detail in forward-looking information. Furthermore, positive news was reported in terms of companies being generally good at providing descriptions of their business and markets, and strategies and objectives, and all companies examined by the ASB provided satisfactory or better descriptions of the current development and performance of the business.
Ian Mackintosh, ASB chairman, said despite areas that need improvement, it is pleasing to see many companies are moving beyond legal compliance with narrative reporting and towards best practice.
LinksA Review of Narrative Reporting by UK Listed Companies in 2006
February, 2007 |
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