What information should different entities be required to report?

The current requirements

Every company is required to prepare and file annual accounts. Those accounts provide the core financial information through the financial statements and accompanying notes. 

Many companies must also additional narrative reporting, primarily the strategic report and the directors report. Together, the two elements form the annual report and accounts (ARA) with the narrative reporting often referred to as the "front-half" and the financial statements and notes referred to as the “back-half”. 

Narrative reporting plays an important role in helping investors and creditors understand a business. The UK’s narrative reporting requirements, particularly the strategic report, has become a valuable document that underpins the UK’s reputation for corporate transparency; supporting effective stewardship and accountability.

Narrative reporting requirements have largely developed through company law, regulations and other legislative initiatives, while the financial statements draw on a combination of company law and accounting standards. The interaction between these different sources of requirements contributes to the complexity of the UK corporate reporting framework.

The strategic report

For companies required to prepare one, the strategic report provides narrative information about the business, including:

• a review of the business, including principal risks and uncertainties,
• key performance indicators, and
• explanations of amounts included in the accounts.

All companies, other than those within the small companies exemption (which includes micro-entities) are required to prepare a strategic report. In October 2025, the government announced plans to exempt most medium-sized private companies from this requirement.

The directors’ report

The directors’ report contains statutory information and other disclosures required for relevant companies. Directors of all companies, except micro-entities, are currently required to prepare a directors’ report.

Also, in October 2025, the government announced plans to remove the requirement for companies to prepare a directors’ report as part of the annual report and accounts. While this legislative change is expected to remove some disclosures entirely, others are expected to be relocated within the wider annual report package.

The development of secondary legislation to introduce the changes announced in October 2025 remains in progress.

Additional reporting requirements

Additional narrative reporting requirements apply depending on the size, status and nature of an entity. These include:

• governance disclosures;
• remuneration reporting;
• section 172 reporting;
• workforce disclosures;
• climate-related reporting; and
• other sustainability-related information.

Some requirements are included within the strategic report, while others sit within or alongside the directors’ report or wider annual report package. Many of these requirements have their own scoping criteria and thresholds. Some requirements apply broadly while others apply only to listed companies, public-interest entities, large companies or companies meeting specific scoping criteria.

The result is an increasingly varied set of requirements with different thresholds. Companies must often assess multiple sets of reporting requirements leading to confusion and complexity.

ICAEW has previously expressed concerns that the volume and complexity of reporting requirements has increased over time as a result of overlapping, duplicative and piecemeal development. We have highlighted the scope to streamline narrative reporting, including by revisiting thresholds and bringing size-based and scoping provisions together in a clearer and more coherent way. 

What information should be reported?

A clearer articulation of the purpose of the annual report should provide the foundation for determining which companies should be required to report what information.

A purpose-led framework would need to explain:

• what information different types of entity should be required to report,
• why that information is needed, and
• whether the annual report is the most appropriate location for it.

ICAEW has argued that information that does not serve the needs of primary users should generally sit outside the annual report, rather than expanding the annual report to serve multiple and potentially conflicting objectives.

The case for particular disclosures should be assessed by reference to the purpose of the annual report and the needs of users. A coherent framework should be capable of explaining why a requirement applies to one category of entity and not another, linking requirements to user needs, public interest, accountability and the role of the annual report rather than inherited thresholds alone.

Listed companies and public-interest entities are likely to have more extensive external users and stronger accountability expectations. For those entities, the annual report may need to include broader information about:

• strategy,
• performance,
• governance,
• risks,
• resilience,
• sustainability-related matters, and
• long-term prospects.

The development of UK Sustainability Reporting Standards reinforces the need to consider the annual report as a coherent package. Sustainability disclosures, financial statements and the strategic report should provide complementary perspectives on the business, rather than developing as separate layers of reporting.

A purpose-led approach may support a move away from a combination of broad and ad hoc prescribed disclosures towards more principles-based requirements that can be applied in each company's circumstances and support assessments of long-term prospects.

Duplication and overlap

The volume of narrative reporting requirements has increased significantly over time. Many requirements were introduced to address legitimate information needs or policy objectives. However, because they were developed by different sources and at different points in time, the resulting reporting package contains areas of overlap, duplication and complexity.

Examples highlighted by ICAEW has in the past include stakeholder engagement disclosures in the directors' report which overlap with the section 172(1) statement, such as:

• the employee engagement statement and
• the statement of engagement with suppliers, customers and others.

ICAEW has also identified some standing information, including disclosures on the components and purpose of pay and certain detailed remuneration disclosures, that may be of limited ongoing value to users and could potentially be rationalised or located outside the annual report without undermining accountability.

How requirements are developed

Part of the challenge lies in how reporting requirements are developed. Requirements for financial statements are largely contained within accounting standards, while narrative reporting requirements are generally established through primary and secondary legislation. This distinction can contribute to complexity and make requirements more difficult to update, remove or rationalise over time.

Primary and secondary legislation provide stability and predictability, particularly where requirements reflect public policy choices. However, requirements embedded in legislation can be difficult or time-consuming to update or remove. Over time, this encourages a pattern whereby new requirements are added while older requirements remain in place, despite their continuing usefulness not being clear.

A modernised corporate reporting framework should consider whether legislation should focus more clearly on the overall direction and objectives of reporting, with detailed requirements developed or maintained through appropriate standard-setting or regulatory mechanisms which could allow greater flexibility.

Any such approach would need safeguards, recognising that some reporting requirements reflect policy choices that need to remain subject to legislative oversight.

Questions government is asking