A Case of Lengthier Annual Reports Essay Example | Topics and Well Written Essays - 1000 words

A Case of Lengthier Annual Reports - Essay Example It also includes the company’s mission statement and pertinent financial statements (Holmes, Sugden, & Gee, 2008). While annual reports used to fall considerably below the 100-page mark during the last decade, a survey by business advisory firm Deloitte shows that in 2010, the average length of annual reports has reached an all-time high of 101 pages (Deloitte, 2010). Interestingly enough, the lengthiest reports are littered with more advertisement-like photographs and captions than relevant narratives and figures. These are the supposed culprits of reports being lengthier than they used to be. Such a phenomenon is of primary interest because of the impact that this has on the ability of such reports to serve their true purpose. Questions arise as to whether lengthier reports actually provide readers with more information or additional confusion? Do the long reports indicate that companies are revealing more of their respective businesses’ actual performance or are they merely an effort to gloss over weaknesses that new regulatory rules aim to draw out? Do lengthier reports mean more substance or just more clutter? This paper attempts to provide answers to these questions and adequately support the claims made herein by extracts from actual company annual reports. Company reports included are those of Ericssion, Carlsberg, and Walmart. Reasons for the increasing length of annual reports According to Isobel Sharp, an audit partner at Deloitte, annual reports are significantly increasing in length because companies are now revealing their company’s business risks and even having important performance indicators disclosed in their reports. Moreover, corporates now provide a director’s responsibility statement, a requirement introduced around four years ago as a consequence of EU’s Transparency Obligations Directive (Deloitte, 2010). Essentially, the many rules that are brought up in recent years are also being blamed for the cons istently rising trend in annual report length. However, the Financial Reporting Council (FRC) of UK points out that company reports in general are trying to please too many users at the same time, hence the almost unstoppable increasing trend in the length of annual reports (UK FRC, 2010). Preparers try to put in as much additional information as they can in an attempt to make the reports as appealing to current and prospective investors as possible (Campbell & Slack, 2008). One company that illustrates this is the 163-page Annual Report by the Carlsberg Group of companies which feels so much more like a 163-page advertisement, with pages that are more fitting in a magazine than in a business report. On the other hand, Boeing’s annual report cannot be more straightforward in its layout and content. Yet, the company needed 156 pages to provide all the data needed and required by regulatory institutions. These two examples illustrate that the burgeoning lengths of annual report s are both a result of additional requirements from regulatory institutions, and the trying-to-please-everybody approach of report preparers. If these requirements are further increased in the future, then lengthier annual reports may definitely be expected. Experts are even hinting that 200 page mark may not be far from being surpassed considering the current trend of adding more and more arguably irrelevant pages to annual reports. More words: For better or for worse? Preparers of annual reports reveal that because of the need to effectively inform shareholders of what is happening in the business, and the need to be able to satisfy the disclosure rules set by regulators, more words are apparently needed (The FRC, 2011). However,