Legislation and guidance

Moves to make pay hikes in the boardrooms of the UK's largest companies take rank and file salary conditions into account have been called into question again as the deadline for the rule change draws closer. The demands are part of requirements for the Companies Act, which comes into force next year.

Following consultation with stakeholders earlier this year, the Financial Reporting Council (FRC) has launched a project to review complexity and relevance of current company reporting requirements. The scope of the project includes requirements relating to financial statements, accompanying management commentary and other reports. The first goal of the project will be to understand the causes of complexity in corporate reporting and engage the community in a debate about how to stop complexity increasing further.

"KPIs for marketing reporting: A framework for effective marketing disclosure", a new guide from the Institute of Practitioners in Advertising (IPA) has found that marketing Key Performance Indicators (KPIs) are still absent from the company reports of the FTSE 350. This is despite brands forming an average 12% of a company's value.

"Financial and Business Reporting on the Internet", a new publication offers guidance to assist companies in developing effective investor relations sections for their web sites. This Discussion Brief is a joint publication from the Canadian Institute of Chartered Accountants (CICA) and the Canadian Investor Relations Institute (CIRI), and offers practical guidance for the content and organisation of an on-line investor relations section.

How well do corporate websites serve the various interest groups that use them? Siemens, BP and Royal Dutch Shell are the top three corporate websites, according to the The FT Bowen Craggs Index which has examined this question. Companies included in the Index are taken from the FT Global 500 2007, ranked by market capitalisation. The top 25 from each of the US, Europe and the rest of the world have been indexed.

An amendment to the Climate Change Bill is expected to require all quoted companies to detail carbon emissions in their annual reports after backbenchers and green groups forced the Government to impose tougher climate-change reporting requirements.

In the UK, the Accounting Standards Board published a press release on 10 January 2008 to remind directors of quoted companies of their new legal duty to produce an enhanced business review for years commencing on or after 1 October 2007 accompanied with some guidance for all UK companies on how to prepare a business review.

Following a risk-based assessment and discussion with the Financial Services Authority and the Financial Reporting Council's (FRC) Standing Advisory Group, an independent committee which comments on the Panel's proposals, the Financial Reporting Review Panel (FRRP) has announced the sectors that its review activity for 2008/09 will focus on.

The Financial Reporting Council (FRC) believes that the guidance in the Combined Code on Corporate Governance and its associated guidance on internal control (the Turnbull Guidance) and audit committees (the Smith guidance) continues to be appropriate, but feels that members of audit committees might find it helpful to have a reminder of some of the key issues to be considered in preparing corporate reports in the coming months.