A forward-looking perspective within credit institutions annual report : an analysis

Abstract

Purpose: The objectives set out in this analysis were twofold. The primary objective was to understand the influential effects of the conventional annual report on its intended users, and secondly to inquire on the non-financial data, presented by those charged with governance of the company, in the same annual report with the aim of linking both objectives together. Furthermore, an attempt was made to formulate relationships between multiple variables, and identify the effects that these would have in presenting forward-looking financial statements. Following such analysis, recommendations were presented in hopes of improving the presentation of forward-looking reporting. Design: The execution of these objectives were conducted over a number of semi-structured interviews with various relevant stakeholders in the industry. Expertise and insight was for the majority sought from auditors, banking institutions, financial intermediaries and regulators. Findings: The findings set forth included primarily the general emphasis on the relevance of the AR, but nonetheless included a vast variety of unconventional information that is generally overlooked by many investors. Furthermore, the continuous amount of regulation was found to hinder the level of business and hence obstruct further financial innovation. With regards to the forward-projection aspect, even though forward-looking statements were found to be crucial and imperative to the users understanding, such provisions were established as lacking within the general AR. Within this regard, it was found that at the basis of these statements is the element of investor trust, together with a direct influence set forth by the firm size. Conclusions: This study clinches on the imperative note that the application of forward-looking reporting should be achieved through conferring strategic goals, going concern requirements coupled with the industry environment and movement. While the annual report’s application and its assurance may be perplexing at first, all in all it will vastly benefit investors in their understanding and thus deemed advantageous in its implementation. Value: It is longed by respondents that having the general assessment of all relevant stakeholders’ stands as root to further insight through greater studies into the practicality of the subject. Notwithstanding, the varying companies and industry sectors, studying a general case study of a company that projects forward and then monitoring its movement will also serve to shed light on greater benefits and difficulties that may be triggered. Finally, a practical assessment of the assurance provision, comparability issues between parties to achieving a level playing field and the onward move towards sustainability reporting is instrumental to creating further value.