Essay on The Companies Act 2006

Essay on The Companies Act 2006

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As per the requirement of the Companies Act 2006, listed companies have a legal obligation to publish and file their annual reports at the Companies House every year. They will consist of company’s financial accounts, in addition to a narrative report that is intended to support the financial data in a clear and concise manner. The main aim of annual reports is to provide the shareholders, as well as other users such as potential investors, with relevant information on the activities and performance of the company so that they are able to make informed decisions. According to a joint research conducted by Deloitte and the Association of Chartered Certified Accountants (ACCA and Deloitte, 2010) , one of the biggest challenges faced by companies in the recent years is the provision of information in the annual reports that would satisfy both the duty to shareholders of presenting a true and fair view of the company, as well as the duty to regulators to comply with the current regulations. A consequence of such conflict is the increase in length of annual reports to an average of 135 pages (Deloitte 2015). The purpose of this essay is to further identify the reasons for such increase in length and discuss the implications that are consequently faced by users of annual reports. The company examples used in support of the arguments will include listed companies from a variety of industries to provide a broader scope as to the assessment of reporting in annual accounts.
Despite the efforts to minimize the increase in length of annual reports, while staying in compliance with the regulations, the companies were unable to do so as their work had been offset by an increase in length of narrative reports (Deloitte 2015). Narrativ...

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... Carbon Reporting where the company must disclose the amounts of carbon dioxide emissions it has been responsible for, have driven companies to account for activities that are often irrelevant to the needs of the long- term investors. Though sustainability should remain an area of discussion and accountability for companies, it does not contribute to resource allocation decisions faced by shareholders (ASB, 2009), hence could be included in a separate report. The same could also be applied to the requirement to report on gender diversity, similarly, equality is an issue of vital importance, but perhaps it would be beneficial if it didn’t add to an already lengthy report. Incorporating this information on the company’s website would make allowances for supplementation of figures with more context, creating a greater forum of discussion among the interested parties.

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