The institute made the comments in its response to the FRC’s consultation on draft amendments to the guidance on the strategic report, which closed on 24 October, saying the current guidance is a ‘key resource’ and whilst ‘some urgent changes are necessary’, these should not anticipate future developments.

Dr Nigel Sleigh-Johnson, head of ICAEW’s financial reporting faculty, said: ‘Current FRC guidance on implementing the strategic review requirements is well-regarded, and we realise updating it to take into account the non-financial reporting directive has been no easy task. The problem is that in one key area – the ongoing reform of the corporate governance regime – we are still waiting to see what the rules will be.

‘We understand the FRC wants to keep its guidance relevant and up to date, but trying to anticipate the scope and detail of the forthcoming changes, which are still subject to consultation, risks seriously reducing its effectiveness.’

ICAEW has recommended instead that a better approach would be for the FRC to focus on the impact of the non-financial reporting directive (mandatory for 2017 reporting periods), and perhaps updating, extending and re-issuing its July 2017 factsheet to meet the urgent need for clarity for companies in this area.

Sleigh-Johnson said: ‘The FRC can then take the time necessary to consider different views on more extensive changes to the guidance to ensure that its current usefulness and relevance to companies is preserved.’

The FRC’s consultation on draft guidance on the strategic report is here.

Report by Pat Sweet