Financial Reporting and Corporate Governance: Bridging the Divide

In the UK, company legislation for many years has concentrated on the financial information provided by companies to their owners and investors. It was not until the Companies Act 1948 that recognition was given to a company's responsibility to society. Firstly, this legislation was added to by accounting standards developed and applied in the UK and, subsequently, by international accounting standards. Since 2005, the consolidated financial statements of UK listed companies must be prepared in accordance with EU-adopted International Financial Reporting Standards.

Although financial information remains the core of corporate information disclosures, there has been an increase in narrative reporting: that is, the provision of non-financial information which is considered relevant to stakeholders. The Financial Reporting Council (FRC) in the UK is active in pursuing the broadening of information suitable for narrative reporting. At the international level, similar aims are pursued by the International Integrated Reporting Council.