Deloitte’s response to BIS’s consultation on the future of narrative reporting
The consultation sought views on Government plans to make narrative reporting simpler, clearer and more focussed. It included proposals to change company narrative reports to make the framework clearer for companies and easier for investors to locate the information they need. The disclosure requirements placed on companies to streamline and remove inconsistencies are also being reviewed. The consultation also included a number of proposals to make the reporting of executive remuneration clearer and more relevant to investors.
Deloitte continues to support the proposal to introduce a strategic report that would encourage preparers to focus on what is really important. This would play a vital role in enhancing transparency, investor communication and overall confidence in a company.
The best reports are cohesive: they explain how objectives, business model, strategy, risks and KPIs all join together – but very few companies are doing this, therefore we question whether the draft regulations go as far as they could.
Furthermore, there is currently no reference to governance or directors’ remuneration, but we would expect linkage between the strategic report, directors’ remuneration and corporate governance.