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ACCA responds to consultations on the implementation of EU non-financial reporting requirements

Date

18 Apr 2016

Sections

Innovation & Enterprise
Trade & Society

ACCA (the Association of Chartered Certified Accountants) has responded to the European Commission’s consultation on the non-binding guidelines on a methodology for reporting non-financial information and UK BIS’ consultation on the UK implementation of the EU Non-financial Reporting (NFR) Directive regarding reporting financial information.

ACCA believes that non-financial information provides crucial context for shareholders to understand companies’ development, performance, position and impact. As such, we believe that the non-financial disclosures required under the EU Non-financial Reporting Directive should be placed within the annual report, as part of the management report (in the UK, Strategic Report).

Applicable frameworks

Although not mentioned in the EU NFR Directive as an applicable framework for non-financial reporting, in our view, the Integrated Reporting Framework provides the optimal framework for demonstrating the connectivity between non-financial and financial information. Within the overarching framework of integrated reporting, the GRI (G4) and SASB provide the best bases for comparable general and sector-specific reporting.

It is important for the concept of materiality to inform the application of non-financial reporting requirements: for information to be useful and understandable, only information that is of strategic importance should be disclosed.

Implementation timeline

The implementation timeline is very tight: the European Commission is to publish non-binding guidelines on non-financial reporting by 6 December 2016, and the Directive is to be transposed into Member State laws by the same date. The requirements are to apply to companies during 2017. It is very important that the European Commission makes their guidance as practical and helpful as possible to companies reporting under the Directive. Companies in the UK will be looking to the FRC to provide consistent guidance on the implementation of the Directive in the UK, but the FRC will need to consider the timing and content of the EC’s non-binding guidelines.

Need for further guidance

The Directive requires auditors to ‘check’ whether the non-financial statement has been provided. To avoid widening the expectation gap, the European Commission needs to clarify the intended scope of the auditor’s responsibilities around non-financial information. ACCA believes that specific independent assurance on non-financial reporting should be market-led, rather than mandated.

Regarding diversity disclosures, further guidance is needed to put the disclosures around diversity policy in the context of the company’s objectives.

Technology

Looking further ahead, the use of technology can help companies produce interactive reports that better target the information needs of different stakeholders. Technology also allows dynamic, regularly changing information to be updated on a timely basis, providing users with more up to date information, a potential explored in the Federation of European Accountants (FEE)’s 2015 Cogito paper, ‘The Future of Corporate Reporting – creating the dynamics for change’. As blockchain and other forms of mutual information transfer develop, further evolution is expected in this area. Corporate reporting should stand ready to respond to the opportunities that technology brings, while ensuring accountability over information is maintained.

For media enquiries, contact:

Monique McKenzie, ACCA Newsroom

T: +44 (0)20 7059 5622

M: + 44 (0)7725 613 447
E: monique.mckenzie@accaglobal.com
Twitter @ACCANews

Notes to Editors

About ACCA

ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. It offers business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.

ACCA supports its 178,000 members and 455,000 students in 181 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. ACCA works through a network of 95offices and centres and more than 7,110 Approved Employers worldwide, who provide high standards of employee learning and development. Through its public interest remit, ACCA promotes appropriate regulation of accounting and conducts relevant research to ensure accountancy continues to grow in reputation and influence.

Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. It believes that accountants bring value to economies in all stages of development and seek to develop capacity in the profession and encourage the adoption of global standards. ACCA’s core values are aligned to the needs of employers in all sectors and it ensures that through its range of qualifications, it prepares accountants for business. ACCA seeks to open up the profession to people of all backgrounds and remove artificial barriers, innovating its qualifications and delivery to meet the diverse needs of trainee professionals and their employers. More information is here: www.accaglobal.com

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