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

Explore the evolution and impact of online reporting in accounting, from early web terms to current best practices. Learn about global activities, technological advancements, and the future of financial and business reporting. Stay informed on the changing landscape of corporate reporting on the internet.

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

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  1. Online Reporting:Rules, Roles and Responsibilities of Accounting on the Internet Chairman: Andrew Lymer University of Birmingham & Lymer & Associates a.lymer@lymerassociates.co.uk

  2. Introduction • Online reporting ‘old’ in web terms • Generations of Corporate Websites • Best practice still developing daily

  3. 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)

  4. 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

  5. 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)

  6. Recent Global Activity • Activity has attracted regulator/ profession interest • CICA - Oct 99 • IASC - Nov 99 • AICPA - Dec 99 • FASB, DTI and ASB - Feb 2000

  7. 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’

  8. 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

  9. 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

  10. 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

  11. 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

  12. 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

  13. 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)

  14. 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)

  15. 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’

  16. 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

  17. 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%

  18. a.lymer@lymerassociates.co.uk

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