KPMG

Better business reporting needed for better investment decision making, says KPMG

Better business reporting is needed to support better investment decision making, according to a KPMG survey that revealed a disconnect between key business drivers and the performance measures being communicated.

KPMG International examined 90 companies’ reports from around the world in the KPMG Survey of Business Reporting.

The survey questions whether the historical focus of today’s annual reports is driving short-term decision making by both investors and company management. It also reveals a disconnect between the key drivers of business value and the content of reports.

For example, within the sample analysed:

  • While more than half of audit committees consider customer focus to be one of their top three drivers of business value, only seven per cent of reports surveyed provided performance data on customer focus or satisfaction
  • 85 per cent of reports surveyed did not identify brand and reputation as a key risk
  • While the average report in the survey was 165 pages long, it only provided an average of four operating performance measures; 21 per cent of reports surveyed did not provide any operating measures of performance

According to KPMG, reports need to take a longer-term view and provide a broader perspective to help investors take their assessments beyond current-year earnings.

Matt Chapman, KPMG in the UK’s Better Business Reporting leader and author of the survey, said: ‘Businesses that are investing in their long-term future should have a strong incentive to make this investment more visible. We need to recognise that the financials are only the start of the story and better align performance measures with the drivers of shareholder value to support this.’

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