1. Financial Reporting on the Internet Andrew Lymer Lymer & Associates and The University of Birmingham a.lymer@accountingeducation.com

2. Outline zBackground zCurrent Technologies & Trends zInternational activity zBest practice quick guide zDemise of annual reporting? zConclusion

3. Background zInternet History - the bits that still matter yDeveloped in USA yNo central governing body yStatistics? - big enough to matter! xEstimated 850 million indexable web pages yHigh penetration amongst companies xRecent global survey of large co.s - 62% x100% in Germany, Sweden, Canada and USA xLowest - Chile at 52%

4. Current Technologies zThe Technologies yCD-ROM - largely bypassed yElectronic Paper - e.g. Adobe Acrobat yHTML + plug-ins, multimedia, 3D yDynamic media - database driven, Java yPush technologies yXML - the future? yIntelligent Agents ….

5. International Activity zOnline Reporting Current ‘Hot Topic’ yAICPA - xJenkins Report (94), Elliott Report (96), Vision Project, Continuous Auditing Report (99), XFRML yFASB - ‘Top 4’ strategy item xBusiness Reporting Research Project (99) xFaux com Inc. (98) yICAEW & ICAS x21st Century Company Reporting (98) xBusiness Reporting - An Inevitable Change? (99)

6. International Activity zCICA - ‘Impact of Technology on Financial and Business Reporting’ yNovember 1999 ‘..the WWW is beginning to challenge the very nature of financial reporting, its boundaries, its frameworks, even its fundamental role in society’

7. International Activity zIASC - ‘Business Reporting on the Internet’ (Nov 1999) yPurpose xto examine the nature of change occurring in business reporting and the dissemination of accounting and business information. xto identify the effects the change may have on the future of accounting standard setting. xto recommend a set of measures to deal with the varied forms of electronic business reporting.

8. International Activity zExamination of top 30 companies in Dow Jones Global Index (22 countries) x16% had no website x22% had website but no financials x96% provide Income Statement x95% provide Balance Sheet x52% provide full Notes to Accounts x45% provide ‘Audit Report’

9. International Activity zIASC Report - UK v USA

10. International Activity zIASC Report Recommendations yShort Term proposal x‘Code of Conduct’ yLonger Term issues xThe ‘Business Reporting Language’

11. International Activity zIASC Report - Short Term Proposal yExample areas covered by code : xclear foundation of responsibilities xdeparture point from financials indicated xcomparison of paper and online versions possible xclear labelling of GAAP used & reconciliation between GAAPs

12. International Activity zShort Term Proposal continued.. xdata should be placed online immediately available xinformation should be stable/accessible over time xaudit reports to be made available for audited data xall supplementary data should be available online

13. International Activity zLonger Term Issues yHTML is presentation language xlimited usefulness yNeed data description ‘language’ xfavoured example = XML yAllows for ‘combined reporting’ without overload xe.g. company financials, news, share details etc yRequires co-operation to make work

14. International Activity zWhere next? yAICPA etc proposal for XFRML? xWhat does it mean? xExtensible Financial Reporting Mark up Language xWhat does it ACTUALLY mean?

15. International Activity zXFRML y‘ 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’

16. International Activity zXFRML: text based information At December 31: 1998 1997 Finished Goods£1,088£1,090 Work in process and4,1124,049 raw materials £5,200£5,139

17. International Activity zXFRML: XML based information stock STOCK At December 31: 1998 1997 Finished Goods 1088 1090 ……..

18. International Activity zIs the future XFRML? yProblems are BIG xrole of auditor/attestation? xwho sets the standards? xwho monitors and enforces? xdata integrity?

19. Current Best Practice zMicrosoft - http://www.microsoft.com/msft yReport as pdf & Financial Review yWebcasts of events such as earnings announcements yLive stock activity link yHistory in excel spreadsheets & graphs yExcel PivotTables for financials analysis yOnline speeches and meetings in video & audio yStatutory filings & Press Releases yNon-financial data

20. Demise of the annual report? zKey issue to be addressed what do people really want? e.g. cost v timeliness who is best placed to deliver it?

21. Demise of the annual report? zBy 2005 - the ‘crystal ball’ yglobally focused companies the norm yinteractive investor relations yonline reporting normal means of corporate communication ysingle GAAP as only workable solution ymonthly reporting ycontinuous audit for all listed companies yfar greater access to historical and forward looking data for all yintelligent software for data analysis

22. Conclusion zInternet developing rapidly as investor relations tool zLots of opportunity to use innovatively zFuture solutions to overload problems in hand zGlobalisation will make online reporting required

23. a.lymer@accountingeducation.com