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ICAS rolls out short form annual reports

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19th Mar 2012
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Welcome to a new type of annual report – short, interesting and waffle-free. That’s the idea behind a “short form” annual report, which has been developed by the Institute of Chartered Accountants in Scotland (ICAS), reports Nick Huber.

The institute wants companies’ financial statements to be more readable and contain more useful for investors and other stakeholders.

Company reports could be cut to less than 30 pages which “tells management’s story of what is important – eliminating the boilerplate narrative and providing decision-useful information,” ICAS has said a recent report.

Financial reports should explain key parts of a company’s strategy and performance without getting bogged down in detail, ICAS said.

The short corporate report - developed by Hugh Shields, chairman of the ICAS Corporate Reporting Task Force and head of External Reporting for Deutsche Bank - is intended to supplement the full annual report, which readers can link to online if they want more information.

The short report will use new financial reporting technologies, such as XBRL, for tagging financial information.

Over time ICAS reckons that its proposed short form report could eventually replace the annual review and summary financial statements. The institute will consult with investors and other stakeholders about its proposals.

The institute has outlined the following five criteria for a short form report:

  • Be consistent with the full annual report presented on a true and fair view
  • Explain the company’s business model and strategy and its performance against these
  • Deliver a clear message about management’s stewardship of the company’s assets – the past
  • Deliver a clear message about the company’s current asset-liability mix and liquidity position – the present
  • Deliver a clear message about where the company is headed – the future
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