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Measuring by halves: Surveying half-yearly financial reportingThree quarters of companies report accounting policy changes in 2009/10 |
Annual financial reporting is like watching Dr Who, warns Deloitte, the business advisory firm. It seems that every year rule changes mean that regeneration is needed.
Deloitte’s report, Measuring by halves: Surveying half-yearly financial reporting, found that 71% of the corporates surveyed reported changes in accounting policies, caused mainly by the adoption of the new accounting standard on segmental reporting.
The survey comprised of 100 companies and 30 investment trusts (companies classified by the London Stock Exchange as being industries of equity or non-equity investment instruments). It was split equally across the top 350 companies by market capitalisation at 30 October 2009, those in the smallest 350 by market capitalisation and those that fell between those categories.
Isobel Sharp, audit partner at Deloitte, commented: “The trend is one of continuing improvement as companies become more familiar with the DTR requirements. The trend for accounting policy changes also continues. The status quo is not an option. In 2010, companies making acquisitions will be required to apply IFRS 3 (2008) with its increased disclosure in both annual and half-yearly financial reports.
“Going concern and liquidity risk continue to be issues for many companies in these uncertain times. Previously, there has been limited explicit guidance on how this should be dealt with in half-yearly financial reports. The FRC guidance published in October 2009 offers clear pointers to directors in both assessing going concern at interim reporting dates and making appropriate disclosures in half-yearly financial reports. This will be of interest to many preparers of half-yearly reports in 2010.”
Additional figures showed that the average time to report has reduced year-on-year from 50 (2008) to 48 days. In both years, larger companies reported more quickly than the middle and smallest 350 groups. Many companies gave additional information not required by the DTR, for example on key performance indicators (KPIs) or forward looking statements.
Other key findings for the report included:
- 95% of companies included a responsibility statement in their half-yearly results announcements, with 87% including all of the content required by the DTR;
- 21% of companies provided the required information in their interim management reports (IMR), an increase from the 10% reported in 2008; and
- 33% of companies reporting under IFRS 8 met the increased level of segmental analysis required in half-yearly financial reporting.
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