[CAnet - news] New vision for corporate accounting using the Internet

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[With the advent of new corporate business models such as user controlled
business processes and Enterprise 2.0 based on SOA and cyber-infrastructure
middleware,  the entire corporate structure may be going through some
fundamental changes that require new thinking on corporate structure,
accounting practices, etc. Every great wave of innovation often leads to new
accounting and corporate structures.  For example the railroads promoted the
development of the limited capital company with complex share structures,
etc.  The changes that the Internet and cyber-infrastructure will bring can
only be imagined.  Thanks to Bill Kleinebecker for this pointer--BSA]

http://marketplace.publicradio.org/shows/2006/11/08/PM200611087.html

New vision for corporate accounting


The world's biggest accounting firms are calling for a major shake-up in the
ways companies report performance. They say more frequent and varied reports
should be posted on the Internet. Stephen Beard reports.


TEXT OF STORY

KAI RYSSDAL: It's not usually a good thing when accountants get creative.
Enron is probably example number one of what can happen when the people in
charge of the books go getting wild ideas. But the accounting profession is
indulging itself with a bit of blue-sky thinking. The industry's biggest
firms got together in Paris today. They floated a radical proposal. Not
quite bean-counting heresey. But close. From the Marketplace European Desk
in London, Stephen Beard has the details.


STEPHEN BEARD: Six major firms - among them PWC, Ernst & Young and Deloitte
& Touche - say the financial reporting system is bust. They say it delivers
a lot of dense, impenetrable information without giving the full picture of
a company's performance.

Along with earnings, sales and cash flow, they say, companies should be
required to provide nonfinancial data. Barney Jopson of the Financial Times:

    BARNEY JOPSON: They mean things like employee turnover. If employee
turnover rises in a business, it tells you maybe something's going wrong.
About customer satisfaction - that's a good measure of how well a business
is doing. Or about product innovation.

The beancounters are also unhappy about the static system of reporting, with
quarterly snapshots of a company's performance. They claim that gives
investors outdated information. What they're proposing, says Jopson, is that
companies should provide a constant, freeflow of data over the Internet:

    JOPSON: The vision might be that everyday investors analysts can get in
to the office and they'll get a customised feed with all the information
they want about what that company has done in the past day. The technology
allows it. Why shouldn't it happen?

Cost is one reason. Many companies are expected to reject the proposed
reform because supplying and verifying all this extra information will be
expensive. But, it would mean more work for the accountants.

In London, this is Stephen Beard for Marketplace.



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