Business Review - has it made a difference?
A survey of the narrative reporting practices of the FTSE 350.
A survey of the narrative reporting practices of the FTSE 350 assessing whether the UK government's approach to narrative reporting legislation (the Business Review) has been successful. The survey covers two aspects of reporting:
- how well companies responded to the Business Review legislation; and
- whether companies are moving towards best practice.
The survey findings suggest that the legislation has prompted real improvements in narrative reporting over the last 12 months, particularly in the wider communication of strategic priorities, key performance indicators and risks.
Despite the positive improvements in the scope and nature of information disclosed, there remains room for improvement in the quality of information disclosed. Not just in the topics covered, but in providing a forward-looking orientation and how clearly strategic priorities align with key resources, management actions and key performance indicators (KPIs).
This poses an interesting challenge for some companies. The improvements witnessed in the communication of strategy and KPIs make it much easier for observers, both internally and externally, to question whether these two are aligned, whether companies are able to support narrative statements, and whether management is measuring the key aspects of business performance to monitor business progress. For many companies, the challenge is as much about the scope and quality of internal management information as it is about the quality of external reporting.
