Financial Reporting on the Internet Andrew Lymer Lymer & Associates and The University of Birmingham...
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Transcript of Financial Reporting on the Internet Andrew Lymer Lymer & Associates and The University of Birmingham...
Financial Reporting on the Internet
Andrew LymerLymer & Associates and The University of [email protected]
Outline
BackgroundCurrent Technologies &
TrendsInternational activityBest practice quick guideDemise of annual reporting?Conclusion
Background
Internet History - the bits that still matter Developed in USA No central governing body Statistics? - big enough to matter!
Estimated 850 million indexable web pages
High penetration amongst companiesRecent global survey of large co.s - 62% 100% in Germany, Sweden, Canada and USALowest - Chile at 52%
Current Technologies
The Technologies CD-ROM - largely bypassed Electronic Paper - e.g. Adobe Acrobat HTML + plug-ins, multimedia, 3D Dynamic media - database driven, Java Push technologies XML - the future? Intelligent Agents ….
International Activity
Online Reporting Current ‘Hot Topic’ AICPA -
Jenkins Report (94), Elliott Report (96), Vision Project, Continuous Auditing Report (99), XFRML
FASB - ‘Top 4’ strategy itemBusiness Reporting Research Project (99)Faux com Inc. (98)
ICAEW & ICAS21st Century Company Reporting (98)Business Reporting - An Inevitable
Change? (99)
International Activity
CICA - ‘Impact of Technology on Financial and Business Reporting’ November 1999
‘..the WWW is beginning to challenge the very nature of financial reporting, its boundaries, its frameworks, even its fundamental role in society’
International Activity
IASC - ‘Business Reporting on the Internet’ (Nov 1999) Purpose
to examine the nature of change occurring in business reporting and the dissemination of accounting and business information.
to identify the effects the change may have on the future of accounting standard setting.
to recommend a set of measures to deal with the varied forms of electronic business reporting.
International Activity
Examination of top 30 companies in Dow Jones Global Index (22 countries)
16% had no website22% had website but no financials96% provide Income Statement95% provide Balance Sheet52% provide full Notes to Accounts45% provide ‘Audit Report’
International Activity
IASC Report - UK v USA
USA UK Website 100% 90%
Financials 87% 66%
Summary 95% 93%
Primary Statements 100% 100%
Notes 84% 100%
Audit Report 89% 93%
International Activity
IASC Report Recommendations Short Term proposal
‘Code of Conduct’
Longer Term issuesThe ‘Business Reporting Language’
International Activity
IASC Report - Short Term Proposal Example areas covered by code :
clear foundation of responsibilitiesdeparture point from financials
indicatedcomparison of paper and online
versions possibleclear labelling of GAAP used &
reconciliation between GAAPs
International Activity
Short Term Proposal continued..data should be placed online
immediately availableinformation should be
stable/accessible over timeaudit reports to be made available for
audited dataall supplementary data should be
available online
International Activity
Longer Term Issues HTML is presentation language
limited usefulness
Need data description ‘language’favoured example = XML
Allows for ‘combined reporting’ without overloade.g. company financials, news, share details etc
Requires co-operation to make work
International Activity
Where next? AICPA etc proposal for
XFRML?What does it mean?Extensible Financial Reporting
Mark up Language
What does it ACTUALLY mean?
International Activity
XFRML ‘Framework which allows companies,
accountants, investors, bankers, industry analysts, regulators and others involved in the financial reporting supply chain, a standard way to prepare publish, exchange and analyze financial reports and the information they contain and allow financial information prepared to be reliably and automatically extracted or exchanged between computer applications’
International Activity
XFRML: text based information
At December 31: 1998 1997
Finished Goods £1,088 £1,090
Work in process and 4,112 4,049
raw materials
£5,200 £5,139
International Activity
XFRML: XML based information
<Type>stock</type><Label>STOCK</label><table columns=“3” ID=“stock”> <columnheaders>
<columnheader>At December 31:</columnheader> <columnheader>1998</columnheader> <columnheader>1997</columnheader> </columnheaders> <LineItem>
<Label>Finished Goods</label><amount period=”1998”>1088</amount><amount period=“1997”>1090</amount>
</LineItem>
……..
International Activity
Is the future XFRML? Problems are BIG
role of auditor/attestation?who sets the standards?who monitors and enforces?data integrity?
Current Best Practice
Microsoft - http://www.microsoft.com/msft
Report as pdf & Financial Review Webcasts of events such as earnings
announcements Live stock activity link History in excel spreadsheets & graphs Excel PivotTables for financials analysis Online speeches and meetings in video &
audio Statutory filings & Press Releases Non-financial data
Demise of the annual report?
Key issue to be addressed what do people really want?
e.g. cost v timeliness
who is best placed to deliver it?
Demise of the annual report?
By 2005 - the ‘crystal ball’ globally focused companies the norm interactive investor relations online reporting normal means of
corporate communication single GAAP as only workable solution monthly reporting continuous audit for all listed companies far greater access to historical and forward
looking data for all intelligent software for data analysis
Conclusion
Internet developing rapidly as investor relations tool
Lots of opportunity to use innovatively
Future solutions to overload problems in hand
Globalisation will make online reporting required