Studying this technical article and answering the related questions can count towards your verifiable CPD if you are following the unit route to CPD and the content is relevant to your learning and development needs. One hour of learning equates to one unit of CPD. We'd suggest that you use this as a guide when allocating yourself CPD units.

This article was first published in the September 2018 UK edition of Accounting and Business magazine.

Corporate reports are a vital source of information about a business for its stakeholders. Although investors and creditors make most use of them, and it is their interests that inform the setting of standards and regulations, companies should bear in mind a much wider group of stakeholders when they are preparing reports.

Tenets of good reporting, the latest in ACCA’s tenets series, sets out ACCA’s views of the general issues that affect the quality of corporate reports, along with the qualitative characteristics of good corporate reporting.

It identifies the following as the key qualitative characteristics of good corporate reporting:

  • Relevance and materiality. Information in corporate reports should influence decision-making, such as whether a user would buy or sell shares or do business with the company. Information is material if its omission or misstatement would influence users’ decisions. Bearing in mind that what is relevant for one user group may not be for another, reports should exclude immaterial detail, as this may obscure the significance of the relevant information they contain.
  • Completeness. A report should provide all information that allows users to understand the position, performance and prospects of the company. Separate reports may be produced for different user groups. As with relevance and materiality, what constitutes completeness of information may differ from one report to another.
  • Reliability. Information should be unbiased and accurate. A report will often have to include estimates, some of which may turn out to be inaccurate. But to be free from error, estimates should be based on the best evidence available at that time, and significant estimating uncertainties should be disclosed.
  • Comparability. Reports need to offer comparable data over different time periods. Where an organisation publishes different reports for different entities, these periods need to be consistent between each other. Measuring non-financial variables that are commonly covered by other businesses in the same sector in a commonly used manner can be helpful in allowing comparability beyond financial statements.
  • Verifiability. Information should be objective and open to testing. Knowledgeable and independent experts should be able to reach consensus (if not total agreement) on the information.

Corporate reporting, the guidance continues, also needs to be timely and understandable.

Good narrative

ACCA’s report draws a distinction between financial reporting focused on monetary amounts and reporting that concentrates on other narrative, non-financial issues. Non-financial reports need to be future-orientated: while financial statements are historical (although they can help with estimating future cashflows), users of accounts look to the narrative information to inform their assessment of future performance.

In addition to standardised information in the financial statements, management should present entity-specific information on past performance, present position and prospects in its narrative, while avoiding boilerplate disclosures. It should be consistent with the information used by management for decision-making, including use of key performance indicators (KPIs), and cover the material issues discussed by the board.

Central to the assessment of future performance is management’s strategic focus. The business model and strategy should be central to the corporate report so users can assess where objectives have been met and identify if key risks are well managed.

Management should link how value has been and will be created, reflecting how resources and capital interact. The relationship between the six capitals defined by the International Integrated Reporting Framework should also be shown. A good report will demonstrate the connectivity between the resources and capital at the entity’s disposal.

In covering factors relevant to users, corporate reports must strike a balance, fairly discussing significant aspects and presenting them in a neutral way.

Finally, conciseness is key. Online reporting allows links to greater detail for interested users, without distracting other users or obscuring other messages.


However good the framework and diligent the preparers of corporate reports, tension inevitably exists between some of these characteristics: completeness conflicts with conciseness and understandability, while entity-specific information may conflict with comparability with other entities. This has long been a significant area of debate. Overall, good financial reporting maintains a balance between these characteristics.

Peter Williams, journalist