Regulator calls for improvements to disclosure of materiality in annual reports, stressing quality is defined by clarity and focus, not box ticking and volumes of verbiage
The Financial Reporting Council (FRC) has published a paper on effective reporting of materiality to support boards, preparers and investors in the assessment of materiality within corporate reporting.
The move comes as the length of annual reports continues to grow exponentially, with large volumes of commentary, much of which appears to be a tick box exercise rather than ‘exercising judgement’, the FRC said.
The aim is to reduce the page count of annual reports, and make them ‘more concise, coherent and decision-useful’. The average length of annual reports for FTSE 100 companies runs to 237 pages, the equivalent of 147,000 words according to the Quoted Companies Alliance, which said the average is ‘longer than epic novels such as A Tale of Two Cities and One Hundred Years of Solitude’. In the round, the size of annual reports has ballooned by 47% in just five years.
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