The Internet is having a profound effect on the nature of business reporting and the dissemination of accounting and business information. Academic research carried out for the International Accounting Standards Committee recently examined the top 30 companies in each of the 22 countries that make up the Dow Jones Global Index. Of the 85% of top global companies that had a website, nearly 80% carried financial information of some sort. But only 45% provided an audit report. In other words, anyone looking to the Web to provide reliable, accurate and comparable information on which they can make an investment decision is out of luck. At the moment, those who use the Web as an information source for investment decisions haven't a clue about the quality of the information they are looking at on their computer screens. Such lack of regulation is bad for financial reporting. The careful years of work of the IASC and other standard setters could be swept away in the Internet revolution. In answer to this free-for-all, a report - Electronic business reporting - is due out shortly. Written by UK academic Andrew Lymer for the IASC, it is recommending that all financial information of quoted companies on the Web should be covered by a code of Internet conduct. This code would cover areas such as: a clear statement of responsibility so the company is telling the online reader what its financials are trying to do; signal departure points from the site so it would be possible to tell which is company-approved information and which is data from other sources; clearly state any audit qualification. The code also suggests users should be able to compare online versions of financial information with the paper counterpart, and the company should explain differences and changes. In the next few years, traditional annual paper-based reports will lose out to instantly available, instantly updated financial information. The technology is forcing the issue. Online reporting will be the normal means of corporate communication, the reporting cycle could be monthly and there will be a continuous audit for all listed companies. Preparers and users need to recognise the reporting game is changing rapidly and respond. There is opportunity for accountants and auditors in this revolution. But if they don't rapidly define their role in this online world they could find that they don't have one. - Peter Williams is a freelance writer and director of Kato Publishing. ?:
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