View a PDF copy of the Financial Reporting Lab project report: Operating and investing cash flows.
To help companies address these issues, in late 2011 the FRC established its Financial Reporting Lab as a unique mechanism to help facilitate good practice and to propagate innovation in corporate reporting.
In August 2014, the FRC’s Financial Reporting Lab (Lab) published a report Towards Clear & Concise Reporting, which examines the steps companies took in the 2013 reporting season to improve the clarity and conciseness of annual reports. The Lab intends to publish a series of case studies on steps individual companies have taken, or are taking, in relation to ‘Clear & Concise’ reporting, and the views of their investors and analysts in response.
On 24 July 2015, the Financial Reporting Council's FinancialReporting Lab Project ("FRL") announced that it willcommence a study to analyse how quoted companies report theirbusiness models in their annual reports, as required by the UKCorporate Governance Code and the Companies Act. FRL is a projectseeking to improve the effectiveness of corporate reporting withinput from companies and investors.The Financial Reporting Lab has published a report on the policy and practice of dividend reporting. Fifteen listed companies and twenty-six institutional investors were involved in the report. Lab reports do not set out new reporting requirements, they summarise observations on what investors find useful and encourage companies to consider adopting these practices if that would be appropriate for their own reporting. This report provides practical suggestions to help companies communicate information on dividends to investors.The Financial Reporting Lab sees the changes as an opportunity for companies to make their Reports shorter and clearer. It has produced a useful insight Report based on its observations of corporate Reporting. It highlights where progress has been made and suggests how companies might approach moving to more clear and concise Reporting. This means, in effect, removing duplication, boilerplate and out of date wording and, perhaps, putting some of the more detailed material on the website, so that the Report reads better and is shorter. The Report looks at how companies have actually done this. For example, they have thought about the various communication channels they use and matching information to the users’ needs, rather than always including it in full in the Report. They have focussed on what is important to investors, often consulting with them on this. As a result, they have removed immaterial disclosures and focussed on actions taken during the year, rather than on process. Standard documents, such as committee terms of reference, have been moved to companies’ websites. Lastly, they have reviewed layout, ensuring for instance that facts shown in a table are not also described in words. Clear cross-referencing and signposting have been used to aid clarity. The Financial Reporting Council’s (FRC) Financial Reporting Lab has released a project report, Operating and investing cash flows. This report relates to the Lab project report ‘Net debt reconciliations’ published in September 2012. This report, together with the report on debt terms and maturity analysis, completes the Lab’s initial project on debt and cash flow disclosure.