Once upon a time annual reports were virtually the sole preserve of the accountants; packed with numbers broken up by only the briefest of side explanations when absolutely necessary.  Potential investors and lenders took those numbers and turned them into multitudes of formulae, any combination of which was supposed to bring deep and meaningful insights into the inward running and state of the organisation.

Gradually the realisation that numbers weren’t everything permeated the marketplace and explanations were called for.  Responding to this, companies piled more and more information into the annual report until the summaries and the explanations so far eclipsed the numbers that it took a lot of searching to find the simplest of figures.  And yet, these mighty tomes still didn’t provide investors and lenders with the understanding which they sought.

Now the push from national and international bodies is for a simpler form of report; one which is both clear and concise and which will enable interested parties to make a true and fair judgement of the current and anticipated future state of an organisation.  In the UK the Financial Reporting Council (FRC) is leading the way in both setting the standard and in providing examples of good practice.  With the reporting season fast approaching they have just published a reminder of the way in which relatively simple changes can enhance the clarity of reporting.  These changes include paying attention to communication channels, content, materiality and layout.

At the heart of this regime change is the realisation that organisations can no longer work as internalised entities.  They are responsible to their shareholders, to their customers and to the wider world.  Changes in reporting, the drive towards clarity and fairness are merely extensions of a drive towards an internal shift in attitudes and practices.   For some organisations this will mean a complete organisational overhaul, sweeping aside internal silos and outmoded practices in favour of a more flexible customer and investor-focused regime.  For others it may simply mean a resetting of ideas and outlook. 

Either way, those involved in HR and in L&D will be heavily involved; not the least in providing access to the training of new skills and attitudes throughout the organisation.  From the leadership point of view this may require learning new leadership skills, training in organisational development or simply learning how to create clear and concise reports.  For those lower down the organisation it may mean developing a better understanding of customer focus or of new working practices.  But there is no alternative; when investors and regulators demand reports which clearly reflect the state of the organisation; organisations have to respond by strengthening their own internal practices.

If you would like to find out more about company reporting feel free to browse our website www.elementalcosec.com or contact Nick onnick.lindsay@elementalcosec.com.