EY welcomes draft guidance for companies writing Strategic Reports

15 August 2013

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EY welcomes the draft Guidance on the Strategic Report, published today by the Financial Reporting Council (FRC).  The firm supports the FRC’s aim to develop guidance to complement the new Companies Act 2006 Strategic Report and Directors’ Report Regulations 2013, which take effect from 1 October 2013. 

Ken Williamson, partner at EY responsible for corporate governance, commented: “We support the FRC’s intentions to encourage companies to prepare high quality strategic reports to provide shareholders with a holistic and meaningful picture of a company’s business model, strategy, development, performance and future prospects. The guidance, once finalised, should help in this regard.”

He added that. “It provides useful insight on what a strategic report might cover, and how its contents might link with other disclosures in the annual report to meet regulatory and principles-based requirements. The overview of how the different regulatory and codified requirements fit together is particularly helpful.  

“We also think it’s important for the FRC to use this guidance as a means to explain how directors might approach the task of confirming that the annual report is fair, balanced and understandable ( FBU), as required in its UK Corporate Governance Code.

“This presents a big opportunity for companies to enhance further their annual reports. The guidance should be used to encourage boards to ask themselves whether the company portrayed in the annual report is the same as the one they discuss in the boardroom. Boards need to put themselves in the shoes of private shareholders with limited knowledge of the company, and ask whether the annual report makes it easier to understand what the company does and how it works. Answers to these and other questions should point boards in the right direction, in terms of what they might do differently to make this years’ annual report FBU-compliant.”