Research & Strategy
A few weeks ago the Financial Reporting Council held its Annual Open Meeting in the rather beautiful Saddlers’ Hall. This event always enables the FRC to engage with its stakeholders and is a date which few like to miss.
This year’s discussion was no exception. It was particularly interesting given the uncertainties in the UK market, the challenges companies may be facing in the near future and the impressive range of speaker credentials. These included the FRC Chairman; Sir Winfried Bischoff, one of Fortune magazine’s World’s 50 Greatest Leaders; Helen Morrissey, and the former Director of the Institute of Business Ethics; Philippa Foster Back.
Design Portfolio attended to discuss how the FRC aims to ensure and promote clear and concise reporting. We have since received several requests – from those who couldn’t be there – to share our insights.
The FRC is currently assessing the “State of the Nation” due to the number of ongoing investigations into suspected misconduct in statutory audits. Driven by these dealings the FRC itself is becoming the competent authority for audit, altering its structure and governance accordingly. Currently, 70% of the FTSE 350 audits are of a “good standard”. However, there is still work to be done to achieve the FRC’s ambition of 90%.
Due to the latest scandals in the UK market, now more than ever, it is crucial for companies to report their operational activities in a transparent manner. Among many action points this has resulted in the FRC, with the assistance of external bodies, releasing a report issued in July this year entitled: “Corporate Culture and the Role of the Board of Directors”, a project which will be followed by a board effectiveness review.
As a response to the Sports Direct scandal, one of many in the past year, society and stakeholders have taken a strong stand against unethical behaviours with regards to human capital and its role in companies’ operating models. It would therefore be beneficial for companies to start reporting on how resources are focused on human capital, for example the employees’ progression within the company.
Other important points raised concerned the reporting of executive pay, which is an issue frequently raised by shareholders and the low level of employment for the younger generation. There was universal agreement on the idea that companies should become proactive in promoting opportunities to graduates and apprentices.
- With the current UK marketplace in a state of flux there are certainly challenges to overcome. However, with change ultimately comes opportunities and those companies able and willing to adopt new reporting styles and techniques are pioneers amongst their peer group.
- Transparency and clarity are key, often increasing trust and, in turn, investment.
- Investigations, misconduct and scandal inevitably deliver a warning to all organisations. The impact of such a scandal, and the consequential damage, is worth avoiding through the implementation of best practice.
- Corporate culture is increasingly important – so much so that our following blog will detail how culture can give companies a competitive advantage.
If you would like to receive the full report from the Annual Open Meeting, including ongoing efforts and reporting challenges, please email us at email@example.com.
Research & Strategy
DP partners with QCA for reporting advice workshop
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Research & Strategy
QCA workshop in Manchester
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