Coping with annual reports on the web
Complexity blurs honesty
Complexity can obscure honesty as well as clarity. And these are sensitive post-Enron times.
In a discussion paper called 'Year-end Financial Reports: Improving Communication' (2000), the UK Accounting Standards Board (ASB) noted that 'there is evidence that many shareholders do not read or understand much of the detail that now has to be disclosed'.
ASB suggested reframing the law to place more emphasis on printing summary financial statements, after the audited financial statements are complete. Full audited financial statements should continue to be produced for those who require them and for filing, but they would become less important as promotional documents.
For the many shareholders who don't even want to read summary financial statements, ASB continued, companies should also be allowed to provide a simplified financial review. This would report and comment on the standardised set of financial highlights in plain language, and there would be no tabular profit/loss accounts or balance sheets.
For internet reporting, which does not suffer the same legal restraints as print, there is great potential in this suggestion. It provides readers with three choices and is based on summarising and simplifying information — the first steps towards effective web communication.
Next: Web partners
Published : 01/06/2003
