Question

Compare the disclosure requirements of the publicly traded company between the united states and the United Kingdom

Answer 1

The following is a summary of our comparison of US and UK financial reporting. Some of our observations are qualitative in nature, based upon impressions formed when reading the financial statements of US and UK companies. These qualitative impressions are not easily captured by statistical analysis or rigorous logic.

1. If US companies are suffering regulatory overload compared to their UK counterparts, it does not appear to be due to the amount of required, published disclosure. In fact, UK disclosure appears to be of greater quantity and quality than US disclosure.

2. US 10-K reports read like dull, regulatory/compliance documents, although US annual reports (if provided) are more “lively” in nature. UK annual reports appear more “informative” in nature, in many cases providing more detailed insights into the company’s business, strategy, risk factors, etc.

3. UK annual reports provide more information about key judgements and assumptions underlying the financial statements. This is a requirement of IFRS, and this requirement appears to have resulted in more detailed disclosure.

4. UK annual reports provide information about the management of capital and capital investment decisions. This is a requirement of IFRS. US GAAP has no such requirement.

5. UK companies provide more information about Corporate Governance in their annual reports, including: A Governance Report; A Discussion of Corporate Responsibility; a detailed Audit Committee Report, and a Nominations Committee Report. There appears to be more of an emphasis on the qualitative characteristics of corporate governance in the UK than in the US.