CIMA report calls for return to narrative style of reporting

The Chartered Institute of Management Accountants (CIMA) has called for a return to simpler, more narrative coporate reporting, after its research revealed that 93% believe corporate reports have become more complex over the last five years.

At the root of the problem, it argues, is a raft of guidelines introduced in recent years, including the Combined Code on Corporate Governance, International Financial Reporting Standards (IFRS), as well as a host of refinements to existing GAAP (Generally Accepted Accounting Principles).

According to analysis by Deloitte, the average listed company annual report now runs to 96 pages, an increase of 34% over 2005. In bigger companies, the problem is much more severe. Radley Yeldar reports that the average length of annual reports in the FTSE 100 has jumped by a quarter in just two years.

“[Narrative reporting] provides a vital opportunity for management to explain its strategy to investors, discuss the market environment and report how they have implemented their strategy,” said Charles Tilley, chief executive of CIMA. “It sets out the context for their financial results in a way that makes the numbers more relevant and less complex and it should mirror the “top slice” of information regularly reported to boards.”