Lose the excess baggage: companies told

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Companies are being urged to slash their company statements by 30 per cent to prevent readers becoming bogged down in detail.

The recommendations are contained in a report by the New Zealand Institute of Chartered Accountants and the Institute of Chartered Accountants of Scotland to the International Accounting Standards Board (IASB).

The joint working party said the increasing size of annual reports had become a concern to the financial reporting community, with many key messages about a company's performance becoming drowned in detail.

In the UK alone there was a 44 per cent increase in the size of listed companies financial statements between 2005 and 2010.

"So much financial data is hindering, not helping communication," the working party said.

"The conclusion was that we must lose the excess baggage and focus on what's important."

This would ensure that financial statements focused more on what was important to the user and could reduce the cost of printing such unwieldy financial reports, the working party said.

The work was carried out by the ICAS and NZICA after a request from former International Accounting Standards Board chair Sir David Tweedie to help reduce the volume of disclosure requirements in international financial reporting standards.

The recommendations are being presented to the IASB today.

Joint chair of the working party, Tony Frankham said the report emanated from a widely held view internationally that disclosures had grown to the point that they reduce the usefulness of financial statements.

"Both ICAS and NZICA hope that the IASB will implement the recommendations so that the suggested improvements can be introduced around the globe as soon as possible," the working party said.

Co-chair of the working party, Isobel Sharp said the current disclosure baggage carried the penalties of extra cost and poorer communication.

"We have carried out a massive spring cleaning exercise, throwing out those disclosure requirements which simply add clutter to the financial statements and helping preparers be bolder in deleting details which are simply not important to readers of financial statements.

"We are recommending that preparers pack only the essentials into their reports."