Accountancy_Magazine_-_Trust_Me_I_m_an_Annual_Report_article

Accountancy_Magazine_-_Trust_Me_I_m_an_Annual_Report_article...

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Unformatted text preview: III PROFESSIONAL BRIEFING I CORPORATE REPORTING TRUST ME I'M AN ANNUAL REPORT COMPANIES SHOULD CONSIDER WHETHER THEIR ANNUAL REPORTS ARE A RELEVANT AND RELIABLE SOURCE OF INFORMATION, WRITE DAVID PHILLIPS AND MAIKI O'SULLIVAN / n the current economic climate, with ongoing uncertainty about future corporate profitability, information derived from a trusted source is highly valued in the market. On the other hand, analysts perceiving corporate reporting as opaque or difficult to understand will mark management and share prices down first and ask questions later. Given that a recent Ipsos MORI poll indicated public confidence in business leaders has fallen to the same low level as for politicians, this is not surprising. Companies cannot control all the information circulating on them. Analysts, stakeholders and the media will all have a view to express and will themselves be tapping into a variety of data sources. Nevertheless, company management can take steps to be seen as at least one of the trusted sources external stakeholders use. A MATTER OF TRUST The process of building trust has many elements, including personal meetings where analysts see the whites of management's eyes. But among the multiple forms of verbal and written communication, the annual report remains a high-profile and important feature often a stakeholder's first port of call when seeking information on a company. The challenge for management is to produce annual reports that provide a true reflection of activity inside the organisation: where management's strategy underpins the report's contents, including key performance indicators (KPIs); where the link between remuneration and performance is clearly explained; and where risks and opportunities are coherently examined. Effort to improve the usefulness of the annual report, particularly of its narrative content, is ongoing. The 70 DECEMBER 2009 ACCOUNTANCYMAGAZINE.COM Companies score relatively highly in terms of covering the narrative reporting essentials.Companies score relatively highly in terms of covering the narrative reporting essentials....
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