On 7 September, the Department for Business, Innovation, Science and Trade, published its long-awaited proposals to modernise the UK corporate reporting framework. The objective is to reduce complexity and duplication, while rationalising exemptions and offering clarity over the purpose of the annual report.

Responding to the launch of the programme, ICAEW’s CEO Alan Vallance highlighted the need for change: “We hear frequently from members about the impact of the regulatory burden on their businesses, so we are pleased that almost two years after the original announcement the government is taking steps to modernise corporate reporting.”

Why corporate reporting reform is so important

Investors, lenders and other creditors rely on corporate reporting to make economic decisions. Companies are expected not only to report on financial performance, but also to explain how value is created, the governance structures in place to identify risks and opportunities, how those risks are managed and how broader environmental and social matters may affect future prospects.

The current regime, while familiar and proportionate, is not always easy to navigate. The government’s proposals aim to restore corporate reporting to providing concise, decision-useful information to investors and creditors.

The programme launched with a 12-week consultation and Vallance has called on the government to ensure that proper consideration is given to responses.

He said: “We fully support this initiative but with such transformative change to the reporting regime promised we’d encourage the government to take time to ensure all stakeholders are listened to and all options are fully considered.”

How you can help shape modern corporate reporting

Drawing on members’ experiences and knowledge, ICAEW has been vocal on the need to tackle the complexity of the UK corporate reporting framework. 

Many recent consultation responses have expressed the importance of reporting being purpose-driven and called for a more comprehensive approach that considers the purpose of the annual report and its users.

The institute is now calling on members to share their views on the proposed changes over the next few weeks to inform the institute’s formal response to government.

“It is vital that we hear our members' reaction to the government’s proposals and whether they believe the changes will generate benefits that outweigh the costs - not just in the short-term, but also into the long-term.,” said Sally Baker, ICAEW’s Corporate Reporting & Governance, Director.

“We have opened an online survey asking members if they are  supportive of the key proposals. The survey offers the opportunity for members to share their views on alternatives that could be explored,” she said. “The answers we receive will be crucial in shaping our final response to the consultation, so I urge all of our members to take a few minutes out of their day to share their views.”

What are the proposals?

Designed to support economic growth and strengthen the UK's international competitiveness, the proposals cover almost every aspect of the annual report and accounts, including:

• financial reporting,
• non-financial reporting,
• corporate governance,
• remuneration reporting, and
• the wider reporting framework.

The government is asking how reporting requirements can be simplified and made more proportionate by:

• clarifying the purpose of corporate reporting,
• rationalising thresholds and exemptions,
• reducing unnecessary duplication, and
• embracing digital reporting. 

Further details on the proposals can be found in this Insights article. In addition, ICAEW’s Corporate Reporting Faculty has published further information on the Modernising Corporate Reporting (MCR) programme at icaew.com/mcr. The faculty has focused on three key areas:

• What is the purpose of the annual report?
• Does the UK have the right accounting framework?
• What information should different entities report?

The information offers context to the current framework, alongside what ICAEW believes a modern framework could offer and the specific questions being asked in the new consultation.

Have your say

Alongside offering insights into the MCR programme, ICAEW has published a survey for members to share their views on the potential changes.

This is your chance to let the institute and the government know whether the purpose of reporting should stay the same for publicly listed and private companies; what accounting standards should be retained within UK GAAP; what areas should form part of a baseline for strategic reporting; and much more.

Members have until 4 October to share their views. ICAEW’s Corporate Reporting Faculty will be providing updates on the programme over the coming months, find the latest developments at icaew.com/mcr.