Banks must address consistency, clarity and comparability of reporting
9 December 2010
Deloitte’s review of UK banks’ annual reports, to be launched at the BBA conference today, shows that in spite of the increasing volume of annual reports the main area of concern is over the disparate way in which information is presented.
The length of annual reports has grown an average of 20% compared with reports from 2008. These increases reflect the need to meet the additional requirements set out by accounting standards setters and regulators or as demanded by investors.
Mike Lloyd, Banking & Capital Markets audit partner at Deloitte, the business advisory firm, comments: “Banking is a complex business and reporting financial and non-financial information in a clear and concise form to satisfy the needs of both the sophisticated and non-sophisticated reader of the annual reports is challenging. Our review shows that banks are taking great steps to meet these demands, and this response is likely to continue to evolve.”
The review highlighted the desire of the banks to avoid a regulated and prescriptive reporting template. The BBA drafted a Code for Financial Reporting Disclosure, which was voluntarily adopted by the larger UK banks for 2009 reporting, committing them to providing high quality and meaningful disclosures to help users understand the financial position, performance and changes of the business. The BBA code has subsequently been finalised, and the FSA has stated it will discuss its expectations on areas where further improvements could be made with UK banks in advance of 2010 annual reports being finalised.
Zahir Bokhari, head of Banking & Capital Markets audit comments: “The key issue for many banks remains the way in which information is presented and how they can make this comparable between other banking institutions. This review highlights examples of good disclosures followed by banks, and provides a useful guide to best practice for preparers.”
Deloitte’s Review of banks’ annual reports consisted of analysis of mainly the six main UK listed banks together with the Nationwide Building Society.
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