Reports: why more is less

Financial Management (UK), Feb, 2008

Annual reports are growing longer and losing their individuality, according to a survey by Deloitte. This may be because companies are increasingly using model narrative reports to ensure that they comply with complex rules and meet tight deadlines. Further rules wilt be introduced in 2008 when section 417 of the Companies Act 2006 comes into force. This

may exacerbate the trend, it warned.

Deloitte's survey, Written to Order, found that the average number of pages in an annual report was 89 last year, compared with 45 in 1996. The narrative sections had expanded, but the proportion of reports containing formal operating and financial reviews had fallen from 41 per cent in 2005 to ten per cent in 2007.

The number of companies including key performance indicators (KPIs) in their enhanced business reviews (EBR) increased from 67 per cent in 2006 to 81 per cent in 2007. While the average number of KPIs was six, this figure varied widely--one top-350 firm had 29.

The EBR is required to include a description of the main risks and uncertainties facing a company, but only 90 per cent of them clearly did this. Only a third of companies included information on nonfinancial risks such as those relating to strategic, operational and commercial matters.

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Written to Order is available at www.deloitte.co.uk.