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On 14 October 2026, the Financial Reporting Council (FRC) published two thematic reviews covering intangible value drivers and financial instruments reporting. The reviews are practical, action-oriented documents, example-rich reviews that provide a clear signal from the regulator about what corporate reporting quality looks like.

Whether your team produces your strategic report, financial statements, or both, there is actionable guidance in the FRC’s thematic reviews worth reading before your next reporting cycle. Read on to discover what the Council considers annual report best practice.

The FRC’s Consistent Message And Why It Matters

So, what do the FRC’s reviews tell us? 

One: boilerplate, generic, and copy-paste disclosures are no longer good enough. This, the overarching finding across both reviews, is not new, but it’s getting louder. Best practice annual reporting requires company-specific disclosures that tell the story of your business, not a template that could belong to any business in the sector.

Two: connectivity is essential. Information that is scattered, fragmented, or inconsistent across the annual report undermines the quality of the whole document, even when individual sections are well written. This chimes with other reporting requirements –  UK SRS, for instance, which encourages companies to make themes consistent and relevant across consecutive reporting cycles.

The direction of travel in the FRC reporting principles is very much towards decision-useful corporate reporting. What does that mean in practice, and how can you take the stress out of meeting the FRC’s expectations?

Intangible Value Drivers — The Gap the FRC Wants You to Close

In its Intangible Value Drivers review, the FRC reviewed ten companies across:

• Healthcare
• Technology
• Industrial goods
• Consumer products
• Financial services
• Retail
• Travel and leisure

It focused on how well they explained intangible sources of value, including those not recognised on the balance sheet.

The review found that most companies describe their key strengths well, but few explain how intangible drivers – brands, technology, data, customer relationships, workforce – actually support the business model and create value.

There are three specific areas where the FRC found clear room for improvement:

• Business model disclosures. Information on value drivers was often scattered across the strategic report rather than structured and signposted; the FRC encourages cross-referencing to help readers navigate.
• Research and Development reporting. R&D reporting transparency was called out as an area that can be improved. Companies should explain the purpose of R&D expenditure and its progress over time, not just disclose the number; better examples identified spend by programme and reconciled it clearly to the financial statements.
• AI investment. 60% of companies reviewed referred to AI, but none quantified their overall investment in it; the FRC specifically encourages companies that invest significantly in AI to explain the accounting treatment, quantify the amounts expensed or capitalised, and describe the broader implications, including risks.

The Council also found that intangible asset classes in financial statements were often too broadly aggregated. Statements often include a single “capitalised development costs” line, while the strategic report described multiple distinct projects. A professional approach to financial reporting would see more consistency between the two documents.

Connectivity – The Issue That Runs Through Everything

Both reviews flag connectivity as a significant area for improvement, so it’s a theme worth exploring in more detail.

In the intangibles review: the FRC found instances where the strategic report described technology projects and innovation pipelines that weren’t reflected in a corresponding note in the financial statements, or where assumptions about useful life in the accounts were inconsistent with the narrative on technological obsolescence in the risk section.

It may sound obvious, but the review suggests that it isn’t: your annual report should tell one coherent story. An annual report is necessarily drawn together from a number of inputs, but when different sections describe the same business differently, or use inconsistent numbers, it creates doubt – doubt that can invite regulatory challenge.

When it comes to annual reports, narrative coherence is key.

It’s Good News On Financial Instruments Reporting, But Disclosures Need Work

In its second thematic review, on financial instruments reporting, the FRC reviewed 20 listed corporates on their financial instruments reporting – covering hedge accounting, expected credit losses, and debt factoring

The review found that, broadly, IFRS 9 is being applied correctly; the FRC did not need to write to any company about material issues.

However, the FRC did write to most companies with observations about disclosure quality under IFRS 7, which covers how they explain their financial instruments, rather than just how they account for them.

The findings here are more niche and technical, but broadly, the review uncovered a couple of headline findings: 

• Hedge accounting disclosures are often fragmented across multiple sections, making it hard to follow the story
• ECL disclosures sometimes lack the quantitative sensitivity information that matters most
• Debt factoring disclosures often don’t explain cash flow presentation clearly enough

The FRC recommends that companies take a principles-based approach; they should focus on what users actually need to understand, apply the lens of materiality to cut out non-decision-useful detail, and make disclosures clear, connected, and company-specific.

What to Do Before Your Next Reporting Cycle

So, if you are an in-scope business, how can you take steps towards best practice annual reporting that aligns with the FRC’s expectations?

1. Read both FRC reviews, the intangibles review and the financial instruments reporting review. They contain real examples of good and poor practice from named companies, which makes them unusually useful as benchmarks.
2. When compiling your strategic report, ask the question: where do we describe intangible value drivers, and are they adequately explained, quantified, and connected to the financial statements?
3. If you invest in AI, plan now for how you’ll disclose it – the FRC has signalled that this is an area of focus.
4. Review your financial instruments disclosures against the IFRS 7 disclosure objective, not just the individual requirements – does the overall picture make sense to a reader?
5. Check for consistency: do your principal risks, financial statement assumptions and strategic narrative all tell the same story?

Learnings From The FRC’s Reviews + Professional Support = Best Practice Reporting 

This quick summary has hopefully shown that the FRC’s thematic reviews are not just regulatory reading — they’re a practical guide to what a high-quality annual report looks like in 2026, with real examples to benchmark against.

The common thread across both reviews is clear: the Council is looking for specificity, and connectivity, and for materiality applied with judgment. It encourages businesses to avoid boilerplate content, clutter and inconsistency.

For reporting teams navigating these requirements – alongside everything else the annual report demands – having the right production partner makes a real difference. Working with a professional team that understands both the regulatory environment and the craft of clear, coherent reporting moves your corporate reporting cycle from a high-pressure period, potentially with a sub-optimal output, to an ordered, supported and seamless process with a polished end result that aligns with regulatory and investor expectations.

Perivan’s annual report production services team is the UK’s most trusted producer of shareholder and regulatory reports; we support around 300 listed clients, including FTSE 100, 250, and AIM companies. Our 30+ years of experience in creative financial communications gives us deep expertise that enables our clients to produce best practice corporate reporting.

Find out more here or contact us to learn more.