Hitting the notes,
but what’s the tune?
AN INTERNATIONAL SURVEY OF CFOs’ VIEWS ON NARRATIVE REPORTING
ACCOUNTANCY FUTURES
A report from ACCA in partnership with Deloitte
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About Deloitte
About ACCA

Contents

 


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 
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








Hitting the notes – A foreword from ACCA

What’s the tune? – A foreword from Deloitte



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

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





About this report


Executive summary






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
























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














 Management Commentary Exposure Draft
‘Regulation is bad sometimes
but if things aRe left
to discRetion you may
actually disclose too much
infoRmation sometimes.’

‘naRRative RepoRting needs
to be simplified and the
RegulatoRy pRoblems need to
be Resolved.’

‘i would pRefeR as few
RequiRements as possible. how
many people actually Read
thRough the whole thing?
some of the new RequiRements
aRe good to have; howeveR,
they often Result in huge
amounts of extRa, difficult
woRk foR the peRson pRepaRing
it, and that Really kills us.’

‘the main point is that we aRe
asked too many details and we
aRe missing the big pictuRe.’

‘Recently, theRe has been
a RequiRement foR moRe
disclosuRe. i don’t Really like
it but we have to abide by it
because it is a Regulation.’

Executive summaryT



























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













‘the amount of change of
Regulation, and the Regulation
itself, is placing a consideRable
buRden on companies in teRms
of cost and time.’

‘annual RepoRts vaRy veRy much
fRom one entity to anotheR.
some aRe veRy baRe, especially
in malaysia. the company
tRies to disclose as little as
possible but the shaReholdeRs
would like to have as much
infoRmation as possible. also
in malaysia, it is veRy costly to
publish voluminous annual
RepoRts. i think theRe should
be some guidelines on dealing
with the content, volume and
the size of the annual RepoRt.’

‘i would like to see a gReateR
emphasis on foRwaRd-looking
RepoRting to counteR the
tRaditional histoRical
infoRmation contained in an
annual RepoRt.’

‘i think in the cuRRent
enviRonment, the RequiRement
foR naRRative RepoRting has
incReased. afteR the financial
cRisis, investoRs/stakeholdeRs
want to leaRn moRe about
the company they invest in, in
a moRe easily undeRstandable
manneR. the naRRative
RepoRting will have to adapt
to keep up with the changing
RequiRement. theRe cannot
be a pRescRibed standaRd
of RepoRting. howeveR,
ceRtain agencies like iasb oR
RegulatoRy authoRities of
the countRy could pRovide
guidance to this end.’

‘having Regulation is good,
but it should be cleaReR.’


Survey introduction
















 
 


 






































































Rising
to the Challenge












 Rising to the Challenge – A Review of Narrative Reporting by UK Listed Companies, 
‘i think theRe should be moRe
statements about foRwaRd
stRategy, ie RefeRRing to the
financials foR the yeaR ahead.’

‘annual RepoRts these days
just follow the Rules and
Regulations and theRe is no
evidence of engagement
with stakeholdeRs. i find that
most annual RepoRts aRe
histoRically oRiented and
pRovide a lengthy but vague
histoRical oveRall view of the
company. but shaReholdeRs aRe
looking foR moRe infoRmation
about the futuRe and the
pRospects of the company.’

‘i think theRe is too much
Regulation; it is too
RestRictive. it is haRd to keep
confidentiality. this gives
an advantage to unlisted
competitoRs because they
know so much about ouR
business but they aRe not
obliged to tell us anything.’

‘i think the whole annual
RepoRt has become a
RegulatoRy RequiRement as
opposed to an infoRmative
document; and having moRe
naRRatives is not going to help.
they aRe complex and at times
difficult to undeRstand.’

Survey introductionT
Louder than
Words










Louder than Words
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


 Louder than Words – A discussion paper, 
 Statement of Recommended Accounting Standards Number 15, Management Discussion and Analysis

 China Securities Regulatory Commission Order Number 40
 
 Financial Reporting Standard 101 – Presentation of Financial Statements
 




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
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
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
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
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








Study methodology




INDUSTRY
 
 
 
 
 

 
 
 
 

 
LOCATION
 
 
 
 
 
 
 
 
 























     
STOCK EXCHANGE LISTING
9
 

Survey findings



















CHART 1: DRIVING THE PREPARATION OF NARRATIVE DISCLOSURE
 
 
 
 
 
 
 
 

CHART 2: NARRATIVE DISCLOSURES – MOST IMPORTANT CHARACTERISTICS














      






































TSurvey findings

















































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     
CHART 3: NARRATIVE DISCLOSURES – IMPORTANT DRIVERS

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US UK
THE PREPARER’S VIEW FROM T


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

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






MALAYSIA

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








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
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
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



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

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




T THE PREPARER’S VIEW FROM














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



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
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
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
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






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



UAE
THE PREPARER’S VIEW FROM T


















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




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
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
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THE USER’S VIEW FROM T




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
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
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
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
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




























































     
CHART 4: AUDIENCES FOR NARRATIVE DISCLOSURES
















































     
CHART 5: SHAREHOLDERS’ NEEDS AND PREPARERS’ PERCEPTIONS








The UK Corporate Governance Code




TSurvey findings
        












CHART 6: COMMON THEMES IN LEGISLATIVE/REGULATORY REQUIREMENTS ACROSS MARKETS

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Financial
Instruments – Disclosures
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
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
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
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

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


Ministerial Resolution No (518) of 2009 Concerning Governance Rules and Corporate Discipline Standards, 



Commission Guidance Regarding Management’s Discussion and Analysis of Financial Condition and Results of Operations,



Financial Instruments: Disclosures

‘i just think that RegulatoRs
aRe tRying to make eveRy
company fit the same box and
fit the same cRiteRia, which
doesn’t woRk. naRRative
RepoRting can woRk but
it can’t be Regulated. less
Regulation will make naRRative
RepoRting moRe impoRtant
because it will complement
the standaRdised Regulated
financial accounting, which
should make the annual
RepoRt Readily undeRstandable
by the public.’

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Survey findingsT
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
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
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


     
CHART 7: NARRATIVE DISCLOSURES IN ANNUAL REPORTS

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
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
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
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

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
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
















TSurvey findings
























‘shaReholdeRs should be able
to assess the value of the Risks
of a company.’

‘it is totally oveR-Regulated.
the tRend should be the
opposite diRection.’

‘we should avoid infoRmation
oveRload.’

‘the disclosuRe in the
RepoRt should be adequate,
accuRate and substantial,
especially when disclosing
associated Risks.’














































     
CHART 8: POST-FINANCIAL CRISIS: EVOLUTION OF SHAREHOLDERS’ INTERESTS


























Corporate governance and the credit crunch

Climbing out of the credit crunch


Survey findings T
‘naRRative disclosuRes aRe
geneRally impRoving in
quality, but too much volume
and Regulation aRe making
documents bulkieR, making
it haRdeR foR the ReadeR to
see the wood foR the tRees. i
would encouRage a Reduction
in the amount of infoRmation
and RequiRed disclosuRes. this
would make the RepoRt useful.’

‘i would like naRRative
RepoRting to be moRe balanced
and to focus on significant
items. naRRative RepoRting
should not be spRead oveR 50
pages as the attention is lost
and theRe is no way to find the
impoRtant infoRmation.’

‘do not keep changing the
RequiRements. what was
allowed yesteRday is not
allowed today, which does not
make sense.’


















































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






















     
CHART 9: CHALLENGES OF PRODUCING NARRATIVE DISCLOSURES




























TSurvey findings

‘annual RepoRts aRe getting
faR too long because they have
to deal with an incReasing
numbeR of Regulations and
disclosuRe RequiRements.
the length of the annual
RepoRts can distRact the useR’s
attention away fRom cRitical
infoRmation in the annual
RepoRts. i would like to see a
sense of pRopoRtion bRought
to cRitical naRRative RepoRting
disclosuRes.’

 

 
 
CHART 10: FUTURE OF NARRATIVE REPORTING – CFO/FD PREFERENCES


















     
CHART 11: NARRATIVE REPORTING – IMPROVING USEFULNESS

































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























Survey findings T













































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














































TSurvey findings









