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Business Reporting on the Business Reporting on the InternetInternet
Glen L. Gray, PhD, CPAGlen L. Gray, PhD, CPADept. of Accounting & MISDept. of Accounting & MIS
College of Business Administration & College of Business Administration & Econ.Econ.
California State University, California State University, NorthridgeNorthridge
[email protected]@csun.edu
Ohio Council IMA & Kent State Ohio Council IMA & Kent State UniversityUniversity
April 27, 2000April 27, 2000
26th Annual Professional Development Conference26th Annual Professional Development ConferencePre-Conference WorkshopPre-Conference Workshop
Acknowledgement: Some slides were developed with Roger Debreceny, NTU.
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Business Reporting OutlineBusiness Reporting Outline
• Sources of demandSources of demand
• Facilitating factorsFacilitating factors
• Generations of Web reportingGenerations of Web reporting
• Rapid adoption of the WebRapid adoption of the Web
• Technology issuesTechnology issues
• The future: XML & XBRLThe future: XML & XBRL
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Where is the demand coming Where is the demand coming from?from?
• Individual tradersIndividual traders– In US, estimated 10-15m individual In US, estimated 10-15m individual
investors who use the Web to investors who use the Web to
research investmentsresearch investments
• JournalistsJournalists
• AnalystsAnalysts– Supplementing proprietary databasesSupplementing proprietary databases
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Facilitating Factors-Global Facilitating Factors-Global ReachReach
• Tremendous depth of Tremendous depth of Internet access around the Internet access around the globeglobe
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Facilitating Factors-TemporalityFacilitating Factors-Temporality
• Web communication is (nearly) Web communication is (nearly) instantaneousinstantaneous
New YorkNew York
SydneySydney
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Facilitating Factors-FlexibilityFacilitating Factors-Flexibility
• Use hypertext to slice and dice .. Use hypertext to slice and dice .. Provide flexible views for different Provide flexible views for different target groupstarget groups
AnalystAnalyst
CurrentCurrentShareholderShareholder ProspectiveProspective
ShareholderShareholder
SchoolSchoolStudentStudent
company.comcompany.com
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Facilitating Factors-CostFacilitating Factors-Cost
• Cheaper than human IR supportCheaper than human IR support• Cheaper than printCheaper than print
– But not But not muchmuch cheaper cheaper
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Facilitating Factors-LitigationFacilitating Factors-Litigation
• Information available to 10s of Information available to 10s of millions at same time millions at same time
• Webcasting of analyst conference Webcasting of analyst conference calls calls
• Shareholder democracyShareholder democracy• However, poor implementation on However, poor implementation on
the Internet can actually increase the Internet can actually increase litigation risklitigation risk
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Three Generations of Reporting Three Generations of Reporting on the Web on the Web
• Generation I – Generation I – Horse and BuggyHorse and Buggy
• Generation II – Generation II – WebbyWebby
• Generation III – Generation III – Exploit Exploit TechnologyTechnology
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Generations of Web ReportingGenerations of Web Reporting
Gen.Gen. CharacteriCharacteristicsstics
ProsPros ConsCons
II Adobe AcrobatAdobe Acrobat FamiliarFamiliar Needs plug-inNo hyperlinksCannot be indexed in search engines
IIII HTML for text HTML for text and data and data formatting formatting
HyperlinkHyperlinkIndexIndexFastFast
Poor printing supportPoor printing supportDifficult to saveDifficult to saveLost in hyperspaceLost in hyperspace
IIIIII Enhancements Enhancements not possible in not possible in print – tailoring, print – tailoring, interactioninteraction
Alternative ways to Alternative ways to present datapresent dataAdditional Additional informationinformation
May require pluginsMay require pluginsInformation overloadInformation overload
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Rapid Adoption of the WebRapid Adoption of the Web
• CICA Study from CanadaCICA Study from Canada– Published in OctoberPublished in October– Randomly selected 370 companies Randomly selected 370 companies
from NYSE, NASDAQ & Toronto from NYSE, NASDAQ & Toronto – 69% had Web sites69% had Web sites– 35% had some form of financial 35% had some form of financial
reportingreporting
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Rapid Adoption of the WebRapid Adoption of the Web
• FASB Study in the USAFASB Study in the USA– Published in early 2000Published in early 2000– 99% of Fortune 100 companies have 99% of Fortune 100 companies have
Web sitesWeb sites– 94% make financial disclosures on the 94% make financial disclosures on the
WebWeb• Electronic Distribution of Business Electronic Distribution of Business
Reporting InformationReporting Information– Can be downloaded at: Can be downloaded at:
http://www.rutgers.edu/Accounting/raw/fasb/brrppg.html
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The WorldThe World
• IASC research team surveyed the 30 IASC research team surveyed the 30 largest companies in largest companies in eacheach of 22 countries of 22 countries– Asia/PacificAsia/Pacific– EuropeEurope– South AmericaSouth America– North AmericaNorth America– AfricaAfrica
• Business Reporting on the InternetBusiness Reporting on the Internet– Can be downloaded at:Can be downloaded at:http://www.iasc.org.uk/frame/cen3_26.htm
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Stages by CountryStages by Country
CntryCntry No No sitesite
Site-no Site-no acctsaccts
DownloDownloadad
HTMLHTML HTML/ HTML/
AdobeAdobe
Full Full HTMLHTML
Full Full HTML HTML AdobeAdobe
AustraliaAustralia 3%3% 17%17% 24%24% 3%3% 24%24% 7%7% 21%21%
CanadaCanada -- 7%7% 10%10% -- -- 3%3% 79%79%
DenmarkDenmark 15%15% 19%19% 19%19% 8%8% 19%19% -- 19%19%
GermanyGermany -- 24%24% 17%17% -- -- 21%21% 38%38%
NZNZ 10%10% 37%37% 13%13% 7%7% 7%7% 13%13% 13%13%
UKUK 10%10% 30%30% -- -- 13%13% 10%10% 37%37%
USAUSA -- 7%7% 10%10% 7%7% 7%7% 33%33% 56%56%
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Technology IssuesTechnology Issues
• Reporting is dependent on the Reporting is dependent on the choice of technologychoice of technology
• In the IASC report discussed 12 In the IASC report discussed 12 technologies that can be used for technologies that can be used for performance reportingperformance reporting
• All have roles to play in reportingAll have roles to play in reporting– Both good and bad!Both good and bad!
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Electronic paperElectronic paper – Adobe Acrobat – Adobe Acrobat AdvantagesAdvantages
• Cheap to prepareCheap to prepare• Looks like printed statementsLooks like printed statements• Easy to read when printedEasy to read when printed• Cannot be changedCannot be changed• Easy to save from Web site to Easy to save from Web site to
users’ computerusers’ computer
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Electronic paperElectronic paper - Adobe Acrobat - Adobe AcrobatDisadvantagesDisadvantages
• Easy to read on paper but Easy to read on paper but notnot on screen on screen • Very large files – remember 8 second Very large files – remember 8 second
rule!rule!• Requires download of pluginRequires download of plugin• Cannot be indexed by search enginesCannot be indexed by search engines• Cannot hyperlink into an Acrobat fileCannot hyperlink into an Acrobat file• Cannot reuse informationCannot reuse information• WYSIATYG WYSIATYG
– What You See Is What You See Is AllAll That You Get That You Get
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HTMLHTML
• Open standard for information Open standard for information disseminationdissemination
• Convert Word or Excel files into Convert Word or Excel files into HTML, load to siteHTML, load to site
• Fast to accessFast to access• Easy to read on screenEasy to read on screen• Difficult to saveDifficult to save• Difficult to printDifficult to print• Browser incompatibilitiesBrowser incompatibilities
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A Well Designed Page – Coles A Well Designed Page – Coles MyerMyer
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User InteractionUser Interaction
• Allow the user to create their own Allow the user to create their own views of underlying informationviews of underlying information
• What-if?What-if?– CurrencyCurrency– AssumptionsAssumptions– Profitability modelsProfitability models
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User Interaction - MicrosoftUser Interaction - Microsoft
Roll your own financial statementsRoll your own financial statementsRoll your own financial statementsRoll your own financial statements
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Plug-insPlug-ins
• A variety of plugins that are A variety of plugins that are availableavailable
• IncludingIncluding– ShockwaveShockwave– FlashFlash– Excel, PowerPoint viewerExcel, PowerPoint viewer
• Are your users sufficiently savvy to Are your users sufficiently savvy to download plugins?download plugins?
• Security issuesSecurity issues
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RealAudio, RealVideo etc.RealAudio, RealVideo etc.
• Relatively cost-effective way of Relatively cost-effective way of getting across a more –in-depth getting across a more –in-depth message on the Web sitemessage on the Web site
• RealAudio+RealVideo/RealAudio+RealVideo/QuickTime/Windows Media Player QuickTime/Windows Media Player all can play audio and video by all can play audio and video by streamingstreaming
• Audio has low bandwidth Audio has low bandwidth requirements, low costrequirements, low cost
• Video more compelling?Video more compelling?
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RealVideo Version of Annual RealVideo Version of Annual MeetingMeeting
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Intelligent agentsIntelligent agents - EdgarScan - EdgarScan
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Preconditions for Web Preconditions for Web information processinginformation processing
• Desired pages found quickly Desired pages found quickly
• High degree of probability that the High degree of probability that the pages are those requested -- the pages are those requested -- the resource discoveryresource discovery condition. condition.
• Data attributes be readily Data attributes be readily identifiable -- the identifiable -- the attribute attribute recognitionrecognition condition condition
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Resource Discovery ProblemsResource Discovery Problems
• Cannot accurately guess at Cannot accurately guess at company domain namecompany domain name
• What is the What is the officialofficial site? site?• Inconsistent naming of financial Inconsistent naming of financial
informationinformation• Inconsistent navigation strategiesInconsistent navigation strategies• Blurring of financial statements Blurring of financial statements
and remainder of siteand remainder of site
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Potential Solutions to Resource Potential Solutions to Resource DiscoveryDiscovery
• Proper usage of metadataProper usage of metadata• Identify the financial reporting Identify the financial reporting
pages pages • 800m Web pages800m Web pages
– Find Find mymy financial reporting pages???!! financial reporting pages???!!
• Create specialist search enginesCreate specialist search engines
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Intelligent agentsIntelligent agents
• Humans can apply very subtle Humans can apply very subtle rules to find and process rules to find and process information on the Web.information on the Web.
• But, now too much information on But, now too much information on the Web to easily process!the Web to easily process!– 800m pages and counting.800m pages and counting.
• Software agents to find, process Software agents to find, process and analyse data.and analyse data.
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The FutureThe FutureXML and XBRLXML and XBRL
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XFRML from the AICPAXFRML from the AICPA
• XBRL is a new draft standard from XBRL is a new draft standard from the American Institute of CPAs the American Institute of CPAs (AICPA).(AICPA).
• Designed to be a global language Designed to be a global language for representation of accounting for representation of accounting and related information.and related information.
• Designed to be used by a variety Designed to be used by a variety of different parties ..of different parties ..
• See See www.www.xbrlxbrl.org.org. .
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XML – Accounts with meaningXML – Accounts with meaning
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XML – Accounts with meaningXML – Accounts with meaning
And attitude!And attitude!
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XML – So why do we do this?XML – So why do we do this?
• Output the data in a variety of formatsOutput the data in a variety of formats• Reuse data over timeReuse data over time• Conduct peer group reviewConduct peer group review• Automated language conversionAutomated language conversion• Automated currency conversionAutomated currency conversion• Automated output to “printer friendly” Automated output to “printer friendly”
format and “screen friendly”format and “screen friendly”• Integrate with other data .. reuse!! Integrate with other data .. reuse!!
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Software Agents to the fore!Software Agents to the fore!
• All reporting is currently designed All reporting is currently designed for humansfor humans
• Humans are slow, expensiveHumans are slow, expensive– But can handle ambiguityBut can handle ambiguity
• Software agents are fast, cheapSoftware agents are fast, cheap– Cannot handle ambiguityCannot handle ambiguity
• We need data that is:We need data that is:– Over time (up to 10 years)Over time (up to 10 years)– Between peersBetween peers
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Changes in Internet Changes in Internet Communication of Accounting Communication of Accounting
InformationInformationFromFrom .. ..
AISAIS PrintPrint CodeCode DBMSDBMS ModelModel
HumansHumansSoftware AgentsSoftware Agents
CollaborationCollaboration
AISAIS ModelModel
To?To?
WebWeb
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Proposed Code of ConductProposed Code of Conduct
• Lymer, Debreceny, Gray and Lymer, Debreceny, Gray and Rahman have proposed a Code of Rahman have proposed a Code of Conduct for adoption by the IASC, Conduct for adoption by the IASC, for “traditional” reporting by for “traditional” reporting by corporations on the Webcorporations on the Web
• The “Code” provides a checklist to The “Code” provides a checklist to refer to when putting information refer to when putting information on the Webon the Web
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Example items in Code of Example items in Code of ConductConduct
• 2.2. Multiple online files.Multiple online files. If financial If financial reports provided online have the same reports provided online have the same content as versions in other formats, but content as versions in other formats, but has been divided into separate documents has been divided into separate documents for online presentation or downloading for online presentation or downloading convenience, all parts of the set should be convenience, all parts of the set should be listed together on the entity's Web site, listed together on the entity's Web site, and appropriate cross referencing between and appropriate cross referencing between the documents should be provided.the documents should be provided.
• 3.3. Multiple GAAP reportsMultiple GAAP reports. If . If financial reports in print and other media financial reports in print and other media are published on multiple GAAP bases, at are published on multiple GAAP bases, at least the same data should be available least the same data should be available online.online.
