Narrative Reporting – adhering to the FRC guidanceRebecca Dagostino
This article covers tips for being compliant, whilst also minimising time and costs
The FRC Regulation
- Strategic Reporting – the guidelines state that companies included in the legislation must present a strategic report separate from their director’s report. This is to include details of your company’s strategy and business model as well as information on social and community issues and gender diversity within the organisation. The information contained in the strategic report is generally considered to be of most interest to users so presenting it separately in a clear, cohesive manner allows for easier access to pertinent information.
- Greenhouse Gas Emissions – it is now necessary to produce a report on your company’s greenhouse gas emissions as part of the director’s report. You must include data on emissions resulting from all activities your company is responsible for, as well as detailing the methodology you use to calculate these figures. An annual comparison to the prior year is also required.
- Summary Financial Statements – the option to provide shareholders with summary financial statements instead of the annual report has been replaced with an option to provide a copy of the strategic report along with some supplementary material. No further financial information is required, moving the annual report away from a numerical summary of the company’s performance to a more narrative description of company activities. This is in line with the stated aim of making annual reports easier to use and extract information from.
- Other changes – in addition to the aforementioned alterations to the narrative reporting guidelines, companies no longer have to provide information on their activities throughout the year, their charitable donations, asset values or creditor payment policies. The regulations do not present an enormous change to current legal requirements, but it is intended to act as a catalyst for companies to produce more concise and relevant reports.
Tips for Compliance
For some companies, conforming to the new regulations will only require some minor alterations, but for others, it may necessitate a complete overhaul and restructuring of the annual corporate report. There is no prescribed methodology for how you should go about this but some of the following tips may be useful for compliance with the narrative reporting regulations:
- Identify all the components you are going to include in your strategic report – it is good practice to put the most important information here, while the information that is less relevant or does not change each year should be considered supplementary and placed elsewhere. This allows your strategic report to be shorter and more focused.
- Identify the links between these components and decide how best to represent them in your report – if you are currently producing a number of separate reports, you should consider trimming your overall output by combining them or removing overlapping content. Make sure all of the information is consistent and free of contradictions.
- Achieve a cohesive outcome by involving everyone who contributes to the report in the restructuring process – total communication between all contributors throughout the development of the report will create clarity and consistency.
- Use a collaborative reporting production management tool
IBM Cognos Disclosure Management
Complying with the regulations may seem like a painstaking task, but one good way to simplify your narrative reporting is to use IBM Cognos Disclosure Management (CDM).
CDM is a collaborative reporting production management program which fully automates and streamlines your reporting procedure. It operates by bringing together your business data and assembling complex reports and narrative analysis of the kind that is usually produced manually.
Rather than having to go through the usual disjointed processes of filing a report, CDM uses a single platform solution to produce report outputs in.
There are several benefits to using CDM for your narrative reporting. The automated process means that labour costs are reduced and time and company resources saved.
The procedure is much more efficient than the usual methods, and with its unified platform, there is significantly less margin for human error, leading to an increase in accuracy and a reduction in risk.
To find out how HAYNE can help you simplify your narrative reporting contact us