Business reporting on the internet

Background

In November 1999, IASC published a study, Business Reporting on the Internet, as the first step in a possible project to develop standards in that area. The study examined:

  • the current technologies available for electronic business reporting
  • what companies around the world are actually doing (this involved a detailed analysis of the websites of the 30 largest companies in each of 22 countries, 660 companies in all)
  • the sort of standards for electronic business reporting that are needed now, within the constraint of today's technologies;
  • the shortcomings of business reporting on the Internet within current technologies
  • the technological changes that are on the horizon and how can they improve electronic business reporting (particularly the ability to go beyond the Internet as "electronic paper" to facilitate downloading and analysis of financial data).

The study was authored by four experts from academe, Andrew Lymer, Roger Debreceny, Glen Gray, and Asheq Rahman. Paul Pacter, who was then a Technical Director in Deloitte Touche Tohmatsu's Hong Kong office, was project manager for IASC.

Among other recommendations, the study urges IASC to adopt a Code of Conduct for Web-based business reporting. A complete draft of a proposed Code is included in the report. The study also recommends that IASC join a consortium effort - which would include information intermediaries, software companies, securities regulators, national accounting standard setters, international accounting firms, and others - to develop a global electronic business reporting language to meet the needs of investors, lenders, regulators, and others who look to the Internet for financial and operating information about business enterprises.

The report is organised as follows:

  • Chapter 1 reviews some of the impetuses behind the proliferation of Web based business reporting. It also provides background information on the increasing types and number of corporate websites, and the increasing number of online traders.
  • Chapter 2 explores and summarises the multitude of different electronic reporting technologies that can be used by Web designers. These technologies are not mutually exclusive, which means that a designer can use any mix of these technologies to develop a website.
  • Chapter 3 summarises the findings of the existing literature on Web-based financial reporting and adds further findings from a survey of 660 corporations in 22 countries conducted by the authors. The chapter also discusses electronic reporting environments within national disclosure and regulatory regimes such as EDGAR and SEDAR in the USA and Canada, respectively.
  • Chapter 4 examines the information presented in the prior chapters and proposes that the IASC should seriously consider the development of a "code of conduct" that would cover both the form and content aspects of Web-based business reporting.
  • Chapter 5 addresses issues raised by pending and future technologies, which are evolving at a rapid rate. The chapter suggests that to add value to information consumers, it is critical that international standards setters and other organisations respond to these new technologies, which can greatly improve business reporting and subsequent Internet searches. This chapter highlights the significant need for a universal Business Reporting Language (BRL) to facilitate the electronic dissemination and use of business information. The Chapter suggests a consortia approach that will help ensure the development of standards that provide both certainty in reporting and flexibility for future innovations.
  • Chapter 6 synthesises the information provided in the prior chapters to discuss the opportunities, challenges, and implications for the accounting profession and the IASC, its international standard setter.

 

Current status of the project

At IASB's meeting in May 2001, IASB concluded that the project should be handed over to the International Federation of Accountants, who are working on a similar project. IASB concluded that the project "went further than financial reporting" and "should not be published by IASB but at the discretion of IFAC".

 

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