According to the KPMG report, more than 30 per cent of companies included extra information on strategies and prospects in their reporting when compared to the previous year. In addition, almost half of companies studied included enhanced business risk information and 30 per cent either included a discussion of their financial position for the first time, or gave more in-depth analysis than previously.
Duncan McLennan, national managing partner for audit, KPMG Australia said it is encouraging that so many companies are making additional and better quality disclosures.
“By providing a clear explanation of their business model, value drivers, risks and prospects, companies are improving their reporting for investors and other stakeholders,” he said.
“Our research shows that many companies are starting to go beyond the basic disclosure guidance of RG 247, in better articulating their strategy, and the alignment of risks and performance to their strategic objectives," added Mr McLennan.
However, the study’s observations also included many examples where further improvements could be made:
- There are many different types of corporate reporting. Some information in media releases would have been useful to include in OFRs
- Focus has been predominantly on revenue and income items, to the exclusion of key expense items like impairments, restructuring and operating costs
- Many companies’ disclosures include only short-term focused prospects and strategies and boilerplate risk discussion
- Fewer than 50 per cent included their OFR in a single section in the annual report.
In March 2013, ASIC released Regulatory Guide 247 Effective disclosure in an operating and financial review, to provide guidance to listed companies preparing OFRs under s299A(1) of the Corporations Act 2001.