UK companies are calling for a simplification of the financial reporting system, according to research by Baker Tilly.
The survey, which questioned more than 200 companies, found 78% of businesses believe reducing “clutter” in annual reports would not devalue them.
Financial reporting was considered a greater concern for businesses than audit reforms being discussed in the UK and Europe.
Respondents stressed regulations should be tailored according to size, complexity and risks of the business instead of a ‘one size fits all’ approach.
UK accounting rules on pensions, FRS17, came under strong criticism, with respondents suggesting “the pension figures turn the whole set of accounts into nonsense” and detailed pensions disclosures were “undecipherable even by well informed readers”.
Baker Tilly said the survey showed solid support for annual audits, with only a third of companies suggesting it should be abolished. Four in ten respondents said the main value of audit was to ensure good governance.
Nearly 60% of companies rejected the idea of providing additional auditor commentary on financial statements because it may bring additional costs and the subjective nature of commentary could decrease the value of audit.
“We believe there is real value in what we do, and our survey results highlight that businesses are aware that an effective audit helps rather than hinders the management of a company,” said Baker Tilly head of audit Jane Bleach.
“However, financial reporting appears to be a far greater concern for businesses. We want to ensure that any legislation is not damaging to our clients and UK businesses generally and that is why we have written to Vince Cable’s office with the results of our survey.”