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

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

Chairman: Andrew Lymer

University of Birmingham &

Lymer & Associates

[email protected]


Introduction

Introduction

  • Online reporting ‘old’ in web terms

  • Generations of Corporate Websites

  • Best practice still developing daily


Online reporting old in web terms

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

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

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

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

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 accountants1

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

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

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

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


Online reporting rules roles and responsibilities of accounting on the internet

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

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 industry1

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

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

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 up1

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%


A lymer@lymerassociates co uk

[email protected]


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