The UK’s Financial Reporting Council (FRC) issued Friday advice for companies on how to report transparently and effectively when departing from parts of the UK Corporate Governance Code.
The advice builds on the findings of the FRC’s Review of Corporate Governance Reporting issued in November.
The FRC said in its advice that that “too many companies strive to declare strict compliance with the Code”. It added: “Such a formulaic approach leads to boilerplate language, and ineffective reporting that lacks substance and information about governance outcomes.”
In its advice, Improving the Quality of “Comply or Explain” Reporting, the FRC says companies should:
- Embrace the flexibility offered by the Code and develop governance processes and practices that raise standards.
- Make it easy for readers to find out which provisions of the Code they have departed from in their annual report.
- Ensure that they provide full, clear, and meaningful explanations for any such departures.
— Oliver Rowe (Oliver.Rowe@aicpa-cima.com) is an FM magazine senior editor.