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Corporate reporting too short-term focused

03 June 2016

Annual reports need to provide more in-depth strategy discussion, backed by relevant KPIs so that investors can take a longer-term view of corporate health and performance, says KPMG’s second annual Survey of Business Reporting.

The survey highlights that, of the reports surveyed:
• 44% do not look beyond short-term initiatives when discussing strategy.
• Only 9% provide a 5-year track record of operational performance.
• Only 11% show how a company’s risk profile has been managed over time.

KPMG said that there is no need for longer reports either. The current report averages 204 pages in length. However, it said annual reports could be better focused. On average the financial statements made up 42% of each report, while just 15% of each report provided information on performance and prospects, and 14% on business and strategy.

KMPG’s Mark Vaessen stressed financial information is not the only data that matters to investors. “When evaluating a company, investors also need to be able to assess the health of a business, its growth potential and thelong-term sustainability of its earnings.”

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