Coping with annual reports on the web
What are the rules?
Nowadays in the UK all 'quoted public companies' are expected to publish their annual reports online. The government White Paper, Modernising Company Law (July 2002), recommends that this should be as soon as practical after approval and auditing but within four months of the year end.
While regulations for producing printed annual reports are well established, there are no internationally recognised rules on how to present annual reports online except that information must not be misleading. The matter should, several authorities say, come under corporate governance.
As a safety net, many companies apply the same print reporting rules — but overlook basic differences between print and the web as communication media.
Several accounting standards bodies published major research studies on internet financial reporting between 1991 and 2001 — in particular, the International Accounting Standards Committee, the US Financial Accounting Standards Board, the Canadian Institute of Chartered Accountants and the Institute of Chartered Accountants of Scotland.
One prominent concern to emerge was the role of auditors on the web. This is largely because, when hyperlinking from one information source to another, the audited status of material can easily become unclear.
The UK Institute of Chartered Secretaries and Administrators addresses this in its recommended best practice on Electronic Communications with Shareholders (2000).
It suggests that a company should obtain clearance from its auditors before displaying audited material on a website. It should also clearly identify statutory information and indicate when the information being viewed is part of the audited accounts.
Practical ideas on how to distinguish between audited and non-audited material include use of borders or 'watermarking' web pages.
More recently, a discussion paper produced by the International Federation of Accountants (IFAC) last year emphasises the need for financial information on the internet to have the same 'integrity' as its paper form. It urges directors to develop an Internet Reporting Policy that covers control issues, formats and use of hyperlinks.
Next: New medium, same old wording
Back to top
Menu for this article
| 
