Comments on: 3 Levels of Financial Report Transparency

By: Stewart McKie

Stewart McKie — Mon, 01 Mar 2010 00:04:58 +0000

Mike – Thanks for this link. I've recently been reading up on the GRI, Connected Reporting etc. so this is interesting to me. I find the whole division of 'financial' and 'non financial' to be quite unhelpful when considering reporting as a communication process. Hopefully ideas like one report will help to end that artificial separation between what an organization actually does and how much money it makes.

By: Mike Willis

Mike Willis — Sun, 28 Feb 2010 13:06:45 +0000

"One Report: Integrated Reporting for a Sustainable Strategy" by Robert G. Eccles and Michael Krzus is a newly published book that speaks to this topic. It is available here: http://www.amazon.com/One-Report-Integrated-Repor... and other book sellers.

By: Stewart McKie

Stewart McKie — Fri, 26 Feb 2010 09:28:32 +0000

Kel – It's very encouraging to know that you guys are talking about this stuff in accounting classes. Report 'bursting' is, as you suggest, a good way for people to get the subset of information that they care about. The problem with any large publication like an annual report is that very few people actually need to read all of it. That's why level 1 – being able to navigate report content is so basic.

In order to relate this to the current world I think the concept of 'favourites' applies here. For example, once you mark certain sections of a report as a 'favourite' this in effect becomes a template for the next time you view the report. That way when you look at, say, the next quarterly 10-K your template kicks in and only your favourites show up. This is also a form of personalization, which again is all the rage these days.

By: Kel

Kel — Fri, 26 Feb 2010 03:45:54 +0000

Thanks for the reference- I'm glad you didn't dismiss my ideas as silly. It just seems like on some very basic level, we even have formatting tools that we use on websites that could make reading a financial report more user-friendly.

I thought of this in class as we talked about how a solution to the overload of information in disclosures is to have 2 versions of the financial report – the full one, and then one with short summaries of disclosures. Apparently this was "too difficult" and some shareholders complained that there wasn't enough information in the summary.

In this day and age, if people access reports electronically, having those 2 reports shouldn't be so difficult. There must be an electronic way that readers could select which parts of a financial report they want to read, and have that personalized version generated for them.

By: Stewart McKie

Stewart McKie — Thu, 25 Feb 2010 16:44:23 +0000

Derek – Thanks for pointing this out. I agree. Comparability is key and arguably is a function of cross-referencing – not just within a report but across reports. For example if a footnote about a future liability (e.g. the impact of climate change) is cross referenced to some long-term liability number, how many other financial reports are doing similar cross-referencing and what does this tell us in terms of the big picture, say US-wide or globally?

By: Derek Abdinor

Derek Abdinor — Thu, 25 Feb 2010 14:09:52 +0000

agree with #1 and #2, but would change #3 to say that a financial report should be comparable. With others in its sector, region, time period. To me, that is the end purpose of it anyway as capital needs to determine the opportunity cost of being invested in this particular company, as opposed to other options out there.
You could use all the methods you list in order to share the information to be able to compare it.
Yes? No? Whaddy'a think?