The idea is that companies should produce a short strategic report in which they would talk about their business models, their objectives and their strategies for achieving them. They would also communicate key messages on performance, risk, governance and remuneration linked to performance. Under these proposals, readers would then be guided elsewhere – most likely online – for supporting data and further information. The objective here is that information which is material in the eyes of the management will be presented in the strategic report, and information which is material to other people will be placed online. To achieve these goals, the Government is creating a framework to help companies extrapolate key messages and elevate the essentials from the mass of reported information. Whether the new guidance will be voluntary or mandatory remains to be seen, but people will still have access to the hard copy report if they request it. Some concerns have been raised by stakeholders, as to the level of assurance which will be provided by auditors on the information which is excluded from the strategic report, however this is a challenge that the auditing profession will look to address as these proposals progress. everything in an annual report is key or material to somebody.” Many investors in particular still want to see a lot of information in corporate reports. For investors, the corporate report enables them to access all information quickly and in one place, it presents “a snapshot in time” – a complete picture of a company that would become fragmented if companies divided their content and migrated certain elements online. The devil’s in the detail: investor perspective At Black Sun’s recent Annual Corporate Reporting Conference, one representative from a leading investment body welcomed the Government’s proposals in principle but voiced concerns regarding the detail and implementation of the scheme. He commented: “It’s true that the annual report is primarily for shareholders, but we cannot ignore the stakeholder groups and their subjective views of materiality. One of the great problems is that www.blacksunplc.com © Black Sun Plc 2011 7
