Annual reports: Fat, useless and full of jargon
Annual reports are too long and stuffed with management jargon, making them of little use to investors according to venture capitalist Jon Moulton.
The chairman of investment company Better Capital is often described as a “maverick” of the private equity industry and he lived up to his billing at an Ernst & Young panel discussion on financial reporting on Monday in London.
Moulton, a chartered accountant who has become one of Britain’s best known venture capitalists, said that the size of company accounts could be cut “spectacularly” while gaining “utility”.
“We get no opposition to the proposition that accounts are too long and too complicated but they continue to get so,” he complained.
“Large companies can be hideously complicated but auditors still need to get the communication across as to whether the company is a success or failure. Part of their job is about meaningful simplification.”
When researching one company on the internet, Moulton discovered that its chairman and chief executive had been fined hundreds of thousands of pounds for tax evasion. But the information was not disclosed in the company’s annual report, he noted.
Other panellists defended the value of annual reports, arguing they offered useful information for analysts and a repository for information about the business.