Richard Moriarty, chief executive of the Financial Reporting Council (FRC), has warned that the size of annual corporate reports has become unmanageably large, consuming too much of directors' time and obscuring vital information for investors and creditors.
Moriarty stated in an interview with the Daily Mail that the costs and expectations surrounding annual reports have steadily ballooned, partly due to companies dedicating more pages to environmental, social, and governance (ESG) issues like sustainability. He expressed concern that this forces company directors into a "defensive posture" of "box-ticking," detracting from their focus on innovation and growth.
The FRC boss is collaborating with prominent figures in the City, including fund manager Nick Train, to tackle the issue, suggesting a "once in a generation reset" for annual reporting is overdue. While the FRC's primary role is ensuring auditors meet standards for public market integrity, Moriarty aims to foster regulation that promotes growth alongside accountability.
Moriarty acknowledged that the FRC has undergone significant changes since he took the helm three years ago, following high-profile corporate collapses like Carillion. He noted that audit quality in the UK has improved considerably since the "dark period of 2018," which saw a breakdown in public trust. He emphasized that for the UK to achieve growth, the FRC must support businesses and responsible risk-taking rather than hindering innovation.
