Many a smaller quoted company currently benefitting from the corporate governance services of London Registrars is likely to take an interest in the Financial Reporting Council (FRC)’s recent launch of a programme of measures intended to assist firms like theirs to compile better quality corporate reports.

The FRC has published a discussion paper, entitled Improving the Quality of Reporting by Reporting by Smaller Listed and AIM Quoted Companies, in which it outlined the results of a review of the standard of reporting for such companies. Feedback on the findings and conclusions was also requested.

Describing smaller quoted companies as “critical to generating future jobs and growth in the economy”, the FRC’s CEO, Stephen Haddrill, said that they nonetheless required “access to capital to invest and grow. We recognise that these businesses have limited resources and face challenges in reporting.

“Our evidence though is that the annual report is important to investors and the quality of reporting can affect investment, rating and lending decisions. Companies, investors, auditors and the FRC all have a role to play in enabling improvements in the quality.”

The FRC has stated a number of ways in which it will tackle the issues mentioned in the report. It has said that it will not only work with “Professional Accounting Bodies and others” to develop ways of providing finance staff with more focused training, but it will also give Audit Committees and Boards practical guidance on the evaluation of a company’s financial reporting function and process.

Other outlined strategies include promoting options for reduced disclosures compared with IFRS for such companies, in addition to giving annual guidance to smaller quoted companies’ boards on the current issues, areas of focus for investors and common errors. Ways will also be sought to improve corporate reporting quality by enabling smaller quoted companies and their investors/analysts to participate in the work of the FRC’s Financial Reporting Lab.

The FRC will also discuss with the London Stock Exchange and UK Listing Authority how it can ensure that companies have appropriate financial reporting resources. According to the FRC, its evidence suggests that smaller quoted companies do not prioritise the preparation of a higher standard of annual report due to a belief that little attention is paid to it by investors.

However, the FRC added that it had been told by investors that they did, indeed value such reports, partly due to the smaller number of analysts’ reports. Furthermore, companies may fail to keep up to date with reporting requirements due to insufficient skilled resources.

The FRC has given a deadline of 31st July 2015 for comments and feedback on its discussion paper – an opportunity that many of those drawing upon London Registrars’ corporate governance services in London may wish to take up.