Stop burying us in swollen corporate reports, says audit watchdog boss
The boss of the audit watchdog has warned that the size of annual reports has swelled out of control, costing directors too much time. Richard Moriarty, chief executive of the Financial Reporting Council, said the costs and expectations surrounding annual reports have steadily ballooned as more companies devote pages to environmental, social and governance issues [...]
Richard Moriarty, chief executive of the Financial Reporting Council (FRC), has criticized the excessive size of annual reports, arguing that it diverts directors' time away from driving innovation and growth. The FRC boss contends that the costs and expectations associated with annual reports have grown as companies increasingly include sections on environmental, social, and governance issues.
Moriarty emphasized that directors should focus on entrepreneurial activities rather than getting caught up in the process of meeting regulatory requirements. He explained, "We want boards to spend their time on entrepreneurial activity. The more they are in a defensive posture box-ticking, the less they are thinking about innovation and growth."
Moriarty has been collaborating with prominent figures in the City, such as renowned fund manager Nick Train, to address the issue of bloated reports. He described the conversation as a "once in a generation reset." While the FRC's role primarily involves ensuring auditors meet standards for market integrity, Moriarty advocates for regulations that promote growth alongside rooting out unethical practices.
Since assuming his position three years ago, the FRC has witnessed significant upheaval, including high-profile corporate failures like Carillion, which prompted a review led by Sir John Kingman. Kingman's report called for replacing the FRC with an independent body called the Audit, Reporting and Governance Authority, but such plans were abandoned by the Starmer government.
Despite facing challenges, including recent fines imposed on Big Four accountancy firms, Moriarty maintains that audit quality in the UK has significantly improved since 2018. He noted that the profession had experienced a "complete breakdown of public trust and confidence" before regaining stability. Moriarty concluded by stating that the FRC must foster business growth and support responsible risk-taking rather than hindering innovation.
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