Blogs

Jo Geraghty

Director

When less is more

Date added: 17th Nov 2014
Category: Organisational Culture Change

With organisations no longer having to focus in on interim reports they can spend more time looking to the long term viability of the business and to delivering the long term gains which will benefit investors and the wider economy.

We live in an era of openness and transparency; a time in which regulators and others are pushing organisations to provide clear information which will enable customers and investors to make an informed choice.  So at first glance the move by the FCA to drop the requirement to provide interim management statements seems counter-productive.

But look further and the move makes more sense.  Admittedly an EU regulation change dropping the requirement for interim statements was due to come into force by November 2015 but the decision by the UK to pre-empt the change has been largely prompted by two factors.  The first of these is cost.  Preparing, agreeing and issuing interim statements can take up a disproportionate amount of time and cost, particularly in smaller entities.  This is time which would be better spent on working on the business rather than reporting on the business.  However, although the requirement to remove formal quarterly statements has been dropped, organisations are still required to disclose price-sensitive information at the appropriate time.

The second, and perhaps more important reason, for dropping mandatory quarterly statements is to encourage organisations to look towards the long term development of the business.  There was a concern that quarterly statements encouraged a bias towards a short-term viewpoint and therefore were not in the long term interests of the business, consumers or investors.  So this is a classic case of less is more; with organisations no longer having to focus in on interim reports they can spend more time looking to the long term viability of the business and to delivering the long term gains which will benefit investors and the wider economy.

Leave a Reply

Your email address will not be published. Required fields are marked *

OTHER Blogs

VIEW ALL Blogs

BACK