Online reporting rules roles and responsibilities of accounting on the internet
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Online Reporting: Rules, Roles and Responsibilities of Accounting on the Internet. Chairman: Andrew Lymer University of Birmingham & Lymer & Associates [email protected] Introduction. Online reporting ‘old’ in web terms Generations of Corporate Websites

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Online Reporting: Rules, Roles and Responsibilities of Accounting on the Internet

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Online Reporting:Rules, Roles and Responsibilities of Accounting on the Internet

Chairman: Andrew Lymer

University of Birmingham &

Lymer & Associates

[email protected]


Introduction

  • Online reporting ‘old’ in web terms

  • Generations of Corporate Websites

  • Best practice still developing daily


Online reporting ‘old’ in web terms

  • 1996

    • 81% of US Fortune 150

  • 1997

    • 68% Fortune 50 & 50% Top 50 UK companies distributing reports online

  • 1998

    • 72% of UK companies using for investor relations

      (Source: Lymer ‘The Internet and the Future of Corporate Reporting in Europe, European Accounting Review, Sept 2000)


Online Reporting Activity

  • Situation as at Summer 99:

    • UK Top 30 - USA Top 30

      - 1 had no website - all had website

      - 11 had no financials - only 3 had no financials

      - 11 full HTML accounts - 9 full HTML accounts

      and downloadsand downloads

      Source: IASC Discussion Paper ‘Business Reporting on the Internet’ Nov 1999


Corporate Website Generations

  • 1st Generation

    • experimental e.g. copies of paper reports

    • ‘Jones’s’ websites

  • 2nd Generation

    • other news and background data

    • mechanism to deliver message to smaller investors

  • 3rd Generation

    • active role in operation of company e.g. voting at AGMs

      (‘Online Investor Relations’ Nordberg 1998)


Recent Global Activity

  • Activity has attracted regulator/ profession interest

    • CICA - Oct 99

    • IASC - Nov 99

    • AICPA - Dec 99

    • FASB, DTI and ASB - Feb 2000


Canadian Institute of Chartered Accountants

  • ‘Impact of Technology of Financial and Business Reporting’ (Trites)

    October 1999

  • ‘the WWW is challenging the very nature of financial reporting, its boundaries, its frameworks and even its fundamental role in society’


Canadian Institute of Chartered Accountants

  • Boundaries of information

  • Presentation of unstructured information

  • User-designed reporting models

  • Ensuring comparability

  • Convergence of Management and Financial Accounting functions

  • Information overload


International Accounting Standards Committee

  • ‘Business Reporting on the Internet’

    • A. Lymer, R. Debreceny, G. Gray, A. Rahman

  • commissioned August 1998

  • recommendations:

    • ‘Code of Practice’

    • Business Reporting Language via Consortia approach


IASC ‘Business Reporting Language’

  • Current use of technologies limited

  • Potential value of Internet much greater

  • Encompass wider reporting remit

  • Automation is key - use of XML?

  • Standard reporting language needed

  • Can not develop standards in isolation


AICPA Activity: XBRL

  • eXtended Business Reporting Language (XBRL)

  • Consortium approach to development

    • includes major accounting firms and software houses (North American based)

  • ‘Standards based method for preparing financial data that supports exchange and analysis of information’

  • see www.xbrl.org


FASB

  • Business Reporting Research Project

  • ‘Electronic Distribution of Business Reporting Information’ - Report 1

  • selected findings:

    • democratizing of business reporting

    • the reporting model - multiple sources of information

    • lack of completeness in online reporting

    • timeliness of reporting


Department of Trade and Industry

  • Review of UK Company Law

  • ‘Electronic Communications for Companies’ - consultation document

    • draft Order under EC Bill following 1999 consultation

    • company communications with members and Companies House

    • covers Internet and other electronic methods (e.g. fax)


Department of Trade and Industry

  • incorporation/re-registrations

  • statutory declarations replaced by statements that can be electronic

  • common members communications can be done electronically

    • annual reports, summary statements, notice of meetings etc

  • proxy appointments but NOT electronic voting (yet)


Accounting Standards Board

  • Recognises the increasing role of the Internet

    • ‘..companies should be encouraged to place their preliminary announcements (and other information given to analysts) on their Websites’

    • ‘..case for developing standards for business reporting on the Internet’

      ‘Year-end Financial Reports: Improving Communications’


Arthur Andersen ‘Spice it up’

  • Most recent report in UK - ‘Spice up the story’

    • Survey of narrative reporting in annual reports

      • i.e. info in reports except financials

    • one of objectives = Internet use

    • comparison with 1996 survey


Arthur Andersen ‘Spice it up’

  • 100 companies examined (random)

    • split between top 350, next 700, next 1051 (by market capitalisation)

  • Findings

Have website Financials

Top 350 94%88%

351-1050 82%58%

1051+ 52%21%


[email protected]


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