The UK’s Financial Reporting Council (FRC) has released what it described as a bold discussion paper proposing a future for corporate reporting based on a principles-based framework.

According to the FRC, it outlines “a blueprint for a more agile approach to corporate reporting which challenges existing thinking about how companies can more effectively meet the information needs of investors and other stakeholders”.

It said its proposals were designed to be tested with stakeholders and stimulate the conversation about what corporate reporting should look like. The proposals made include:

  • unbundling the existing purpose, content, and intended audiences of the current annual report by moving to a network of interconnected reports;
  • a new common set of principles that applies to all types of corporate reporting;
  • objective-driven reports that accommodate the interests of a wider group of stakeholders, rather than the perceived needs of a single set of users;
  • embracing the opportunities available through technology to improve the accessibility of corporate reporting; and
  • a model that enables reporting that is flexible and responsive to changing demands and circumstances.

It argued the proposals were consistent with the themes in the independent Kingman and Brydon reviews.

“To build trust in the system for corporate reporting, it needs to be supported by a framework for audit and assurance and regulation,” the FRC said.

The discussion paper comes as momentum gathers to find a solution to meet growing calls for consistent and comparable sustainability-related information from companies. The IFRS Foundation recently launched a consultation on the idea of it creating a Sustainability Standards Board.

It is inviting comments by 5 February 2021. The paper can be found here.

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