Features | From Pivot Magazine

Online reporting is dismal. Here’s how to improve it  

We have the right tools to revamp how we present financial information on the web. What’s stopping us?  

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young business man using laptop, while holding a business documentIn the age of technology, people read in a non-linear fashion, following particular items and ideas across various webpages and reports. Companies should present information in ways that facilitate this approach. (Shutterstock/photofriday)

Massive changes are sweeping through our professionArtificial intelligenceblockchain and advanced analytics allow us to do things that were once unimaginable, such as analyzing 100 per cent of a company’s transactions. Yet, for all our technological breakthroughs, we accountants have yet to snap out of the paper paradigm.

It’s obvious when you look at the way corporations present information. Twenty years ago, many companies didn’t have websites. Of those that did, only half included financial information, which didn’t always address the needs of investors and other stakeholders. Today, the majority of listed companies publish their financial statements, news releases, management discussion and analysis, and environmental, social and governance reports online.

But one important thing has not changed: the content on those websites is formatted as it has been for decades, in PDFs designed to preserve the format of paper reports. The emphasis is on the reports themselves, not the data they contain. The reports are bloated with large and complex footnotes, driven by regulations, standards and fear of litigation. They are written for linear reading—in order to get what they need, people must read them from beginning to end.

But people don’t think that way anymore. If they need information, they want it directly. When you host a group of people for the evening and someone asks when Beethoven lived, it’s likely nobody will know the exact dates. Quickly, someone will pull out a phone and announce that he was born in December 1770 and died in March 1827. With the facts immediately established, the discussion can then move on to the real issue at hand: whether Beethoven was a classical or romantic composer.

In the age of technology, people read in a non-linear fashion, following particular items and ideas across various webpages and reports. Companies should present information in ways that facilitate this approach, making data readily available for decision-making purposes. So far, however, corporate reporting falls short of the needs of the modern world. It’s as if companies are standing on a railway platform preparing big packages for baggage cars, while the rest of the world is flying express. These companies are letting the world pass them by.

To further aggravate the situation, very few companies have adopted integrated reporting—that is, presenting financial, environmental, social and governance information in one report. Integrating this disclosure would allow readers to quickly absorb all aspects of a particular item or issue.

In its 2015 study “The Future of Corporate Reporting,” the Federation of European Accountants (now called Accountancy Europe) makes the case for moving past the paper paradigm. “The corporate reporting of the future should take full account of changes in technology,” the paper states. “Developments in the model for future corporate reporting should be flexible and able to adapt to changes in technology which affect the way people interact with an entity and which significantly affect the delivery of the information itself.”

Taking full advantage of technology means using the features it offers: digital-first formats, links, multimedia and the ability to report on a real-time basis. This can be accomplished through the use of websites, social media and reporting apps, by making reporting data-centric rather than report-centric. Reports should also use formats and markup languages, such as HTML and XBRL, that can be easily downloaded and analyzed by computers without the need for human intervention.

The ideal corporate investor-relations website would use integrated reporting, focused around key performance indicators, with drill-down capabilities to access the more detailed data. This would present the data in an interactive format. By allowing machines to retrieve and analyze information, we humans can quickly establish the basic facts and address the real issues instead.