Australian companies’ annual reports are shorter than their global counterparts, and have ‘cut the clutter’ more successfully – but fall down on covering key issues like business strategy, customer retention and market share. These findings are revealed by KPMG’s international survey of business reporting by 270 companies in 16 countries, including 15 in Australia.
One area of corporate reporting where Australian companies have not been able to reduce the page count is their remuneration reports, which the study showed took up a bigger proportion of annual reports’ volume, here than in most other countries
The main findings, from the companies reviewed, included:
Duncan McLennan, KPMG National Managing Partner – Audit, said: “It is encouraging that Australian companies have performed relatively well in ‘cutting the clutter’ from the financial statements in their annual reports . They have worked hard to keep reports relevant and concise – but there is still room for improvement in the remuneration reports, which the survey showed are quite long by international standards.”
“However, there are some other areas where Australian companies reporting is trailing international best practice – the report shows we don’t perform well compared with global peers in explaining longer-term drivers of value such as use of non-financial resources. In particular, disclosures in respect of R&D, workforce efficiency, products and brand could be improved.
“Disclosures on operating performance and its link to strategy also lag overseas companies. Discussions of strategy tend to be patchy and relatively short-term in nature, and it appears there is not enough detail on the key aspects of the business model for investors to take a view of the company’s longer-term prospects.”
The report showed that there is now some evidence of interest among Australian investors in the move towards integrated reporting.
Duncan McLennan added: “Companies which are embracing better business reporting are connecting their business model strategies and KPIs more directly. Some empirical evidence is beginning to emerge of the benefits of integrated reports in relation to allocation of capital.”
Senior Communications Manager, KPMG
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Insight from reporting practice across the globe, including six must do's for improvement. Features Australian comparison with the global results.
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