Industry group calls for changes to corporate reporting
Corporate reporting is at a crossroad and needs to move in a new direction if it’s to command a central role with investors, according to a newly-formed industry group.
The Report Leadership Group said corporate reporting needed to be more relevant, informative and accessible. The group believes corporate reporting should provide investors with what they want without giving them unnecessary detail.
“As investors model the future they typically have insufficient forward-looking contextual and non-financial information to underpin their cash flow projections,” said Report Leadership spokesman and PricewaterhouseCoopers corporate reporting and communications partner Nick Ridehalgh.
Ridehalgh said unlike traditional reporting, which focuses on past financial performance, what’s needed is more information on a company’s expectations of future performance and what will drive it.
“In essence, the narrative report should be the top slice of management information that is routinely being used in board discussions,” he said.
The group demonstrated how proposed changes to corporate reporting could be applied with extracts from the annual reports of a fictitious company, Generico.
“We are encouraging companies to take a step back from their reports and think about what they need to communicate and what investors want to know. The illustrative report demonstrates a new and clearer report focused on information valued by investors and capital markets,” said CIMA Global president John Coghlan.
Report Leadership is a multi-stakeholder group that aims to challenge established thinking in corporate reporting. It is comprised of the Chartered Institute of Management Accountants (CIMA), PricewaterhouseCoopers, communications consultancy Radley Yeldar and Tomkins plc.
Recommended for you
The new financial year has got off to a strong start in adviser gains, helped by new entrants, after heavy losses sustained in June.
Michael McCorry, chief investment officer at BlackRock Australia, has detailed how investors are reconsidering their 60/40 portfolios as macro uncertainty highlight the benefits of liquid alternatives.
Having reset its market focus to high-net-worth advisers, Praemium’s administration solution has been selected by Bell Potter in a deal that increases the platform's funds under administration by $6 billion.
High transition rates from financial advisers have helped Netwealth’s funds under administration rise by $3.7 billion in the fourth quarter of FY25.
