online reporting
- 1. Submitted to : Dr. Subhash Chander
- 2. Traditional Instruments in Reporting Prospectus Annual General Meeting Stock Exchanges Annual Company Handbooks Published articles on companies Press releases Financial dailies and magazines Financial analyst conferences Interim reports Printed annual report
- 3. Among these PRINTED ANNUAL REPORT is the most important source Effective tool to assist investors Communicates past action of the company Builds confidence and increase investor favour Direct source to investor relations
- 4. Linear presentation format only Cannot be changed, modified and updated Static, historical and backward looking Unable to meet needs of various user groups Limited circulations and available in one language only Not useful in analyzing trend Do not provide decision useful information to target groups High printing and delivery cost Time gap LIMITATIONS OF TRADITIONAL REPORTING
- 5. Increased Corporate Scams New methods -timely, accurate and up-to-date information Financial transparency To remove limitations of traditional system www home page is used as platform to present corporate data Earliest used in America in 1994 Proportion of companies increasing Platform best suited for communication with stockholders EMERGENCE OF INTERNET AS A MEDIUM FOR CORPORATE DISCLOSURE
- 6. MEANING OF Stakeholders are supplied with timely access to records of their cash and securities positions, with information updated at least daily and supplied electronically. It include reporting about meetings, announcements, results at any point of time.
- 7. • Unlimited accessibility - place and time • Easy facilitation of dialogue • An enhanced user experience • Update information and news feeds in real-time. Key source of information on their CSR activities.
- 8. Primary information source: FIRMS Secondary information source: OUTSIDERS Information Repository: WEB PAGE Information Accessor: USER Primary information source: FIRMS Secondary information source: OUTSIDERS
- 9. STAGES OF COPORATE DISCLOSURE THROUGH WEB Stage: I Stage:II Stage:III
- 10. Static Representation of Information • CD-ROM • Electronic paper • HTML Multimedia Enhancements • Plug-ins • Multimedia • 3D • Push User Interaction and Knowledge Management • Search tools and metadata • Java Scripts, Java, and Active/X • Intelligent agents • Extensible markup language (XML)
- 11. CD-ROM Low cost medium Can store 0.65GB of data. Actually an alternative medium to the Internet, it was included in the report It must still be distributed by physical means. Companies must know the names of the recipients and there are delays in the distribution of CD-ROMs. In an office environment, sharing of CD-ROMs is clumsy and expensive.
- 12. ELECTRONIC PAPER Converting existing document into electronic version E.g. Adobe’s Acrobat A few corporations also use Microsoft’s “Word” word processing files and Microsoft’s “Excel” spreadsheets as alternatives to Acrobat to communicate information on the Web. Inexpensive for companies On-screen reading of electronic paper is normally an unsatisfying experience.
- 13. HTML Used to add information to the content of a ‘page’ lingua franca of the Web. HTML uses hypertext concepts to support on-screen navigation through links between any “page” and any other linked “page.” linking of specific elements in the financial statements and their applicable notes. There may not be clear indications that identify the boundaries of the annual report.
- 14. PLUG-INS HTML allowed only simple textual representation and basic graphic capability Enables file viewing within the browser Available with the main browser program
- 15. MULTIMEDIA Enables distributing annual meetings, profit announcements etc on web in real time E.g. Real Time Player, Microsoft Media Player or Apple Quick Time
- 16. 3D 3D software allows developers to create a virtual reality site
- 17. SEARCH TOOLS AND METADATA Meta tags help search engines to locate information easily E.g. Compaq Alta Vista
- 18. JAVA SCRIPT,JAVA,ACTIVE X Providing interactivity within web based annual report pages
- 19. PUSH Oldest example of push technology e mail Allow user to establish profile of information needs Corporate press releases, quarterly results, and new product information can all be pushed to the email list at effectively zero cost.
- 20. INTELLIGENT AGENTS It complement human analyses and provide further support for the decision making processes of data user
- 21. XML Unlike HTML, XML is fully multi-lingual, an important consideration for business reporting. A page using XML tags may be readily translated into a wide variety of languages. J.P. Morgan & Co. Incorporated and PricewaterhouseCoopers LLP have announced the development of FpML (Financial Products Markup Language) to facilitate exchange information on financial products, including derivatives, between market players
- 22. Xiao, et.al. (2002) identified some characteristics of the internet particularly relevant to financial reporting. These points are: As a communication tool , internet would enhance the communicative aspects of financial reporting such as access, dissemination, interaction and presentation. The internet allows one-way, two-way and multi-way communications and permits the development of highly interactive applications. The internet enhances the timeliness of the financial information. IMPORTANCE OF INTERNET FOR FINANCIAL REPORTING
- 23. Internet makes the accounting data electronically portable and globally accessible and as a result, makes it more difficult to regulate cross-border financial reporting. The ability of the internet to integrate with other technologies , such as database, wireless communication and multimedia. This would further enhance the utility of the financial statements. The internet may also affect some data processing aspects of financial reporting (i.e., the underlying recording and measurement system).
- 24. Low cost medium Near zero marginal cost per year No upper limit on no. of users Referring to queries Best medium for pvt. Shareholders Communication with unidentified users of information Presentation advantage Info at different aggregation levels BENEFITS OF ONLINE REPORTING
- 25. Time advantage Raw data for analysis Flexibility in presentation Global reach Access to historical data Online participation in annual meetings Up-to-date information Foreign shareholders Multimedia communications Non financial information Corporate dialogue
- 26. Costs to the Reporting Companies Westarp et.al. (1999) and Xiao, et.al. (2002) identified certain costs of online reporting and these are: The cost savings of posting the company’s results on the web were offset by increased follow-up queries Potential costs will arise from litigation caused by increased and inconsistent information and issues relating to content, confidentiality, data security, presentation format and data credibility. COSTS OF ONLINE REPORTING
- 27. Costs to the Users Xiao, et.al. (2002) stated the potential of information overload caused by internet reporting as a major disadvantage of online reporting. Other potential costs may arise from data security and an increased amount of unaudited corporate information being placed into circulation.
- 28. Lymer (1999) has stated such issues and these are explained below: How should the process of online financial reporting be managed and controlled? Should online financial information be separately or differently regulated? How should data be better structured to assist in the automated production, submission and examination of data? In what forms and quantity should financial data be provided? Why should national standards have to apply to accounts when they are accessible globally? Who should set the standards? Are these accounting or auditing issues, for professional bodies or securities regulators? Who is responsible for the validity and accuracy of online financial data? ISSUES REGARDING ONLINE REPORTING
- 29. Who provides assurance that online financial data remain valid and are not tempered within an unauthorised way? What is the impact of online reporting on statutory reporting requirements? Does the demand exist for disaggregated corporate data? Who is liable for errors in online financial reports and data? Can technology be misused to distribute financial data? What technological solutions can help assure the reliability of online financial data?
- 30. What is the potential for development of online systems by which stakeholders will be able to exercise their ownership rights directly? What newly acceptable forms of financial data provision might arise? What changes to the attestation function performed by accountants will result due to technological changes in reporting? Will real-time reporting become technically possible? If so, how will data be verified? What auditor concerns will arise about the nature and value of their audit report in relation to online reports? Will continuous auditing become prevalent or required? What needs will arise for more rigid structuring of financial data provided online to support verification and comparability?
- 31. Online corporate reporting is still in its infancy stage . However, continued improvement in the use of internet as well as online financial reporting has been marked in many research studies. The more internet will be used by the corporate houses, the more it will create issues for the companies, users, regulatory bodies and auditors. The need is to clearly understand all those issues and to frame strict guidelines for the financial reporting online so that the accuracy and reliability of the financial information online can be ensured. CONCLUSION
- 32. ANY QUESTIONS…..
- 34. REFERENCES Allam, Amir and Lymer, Andrew, (2003), “Developments in Internet Financial Reporting: Review and Analysis across Five Developed Countries”, The International Journal of Digital Accounting Research , 3: 6, 165-199. Ashbaugh, Hollis, Johnstone, Karla M. and Warfield, Terry D., (1999), “Corporate Reporting on the Internet”, Accounting Horizons , 13: 3, 241-257. Craven, B.M. and Marston, C.L., (1999), “Financial Reporting on the Internet by Leading UK Companies”, European Accounting Review , 8: 2, 321-333. Davey, Howard and Homkajohn, Kanya, (2004), “Corporate Internet Reporting: An Asian Example”, Problems and Perspectives in Management , 2, 211-227. Dutta, Probal and Bose, Sudipa, (2007), “Web-based Corporate Reporting in Bnagladesh: An Exploratory Study”, The Cost and Management , 35: 6, 29-45. Gowthorpe, Catherine and Amat, Oriol, (1999), “External Reporting of Accounting and Financial Information via the Internet in Spain”, European Accounting Review , 8: 2, 365-371.
- 35. Khan, M.A.H., Muzaffar, A.T. and Mahmood, A.S., (2006), “The Use of Internet for Corporate Reporting: A Discussion of the Issues and Surveys of Current Usage in Bangladesh”, http://bai2006.atisr.org/CD/Papers/2006bai6365.doc Larren, Manuel and Giner, Begona, (2002), “The Use of the Internet for Corporate Reporting by Spanish Companies”, The International Journal of Digital Accounting Research , 2: 1, 53-82. Lymer, Andrew, (1999), “Internet and the Future of Reporting in Europe”, European Accounting Review , 8: 2, 289-301. Oyelere, Peter, Laswad,Fawzi, and Fisher, Richard, (2003), “Determinants of Internet Financial Reporting by New Zealand Companies”, Journal of International Financial Management and Accounting , 14: 1, 26-63. Pirchegger, Barbara, and Wagenhofer, Alfred, (1999), “Financial Information on the Internet: A Survey of the Homepages of Austrian Companies”, European Accounting Review , 8: 2, 383-395. Shukla, Anita, and Gekara, Mouni Geoffrey, (2010), “Corporate Reporting in Modern Era: A Comparative Study of Indian and Chinese Companies”, Global Journal of International Business Research , 3:3, 42-56. Westarp, Falk, Ordelheide, Dieter, Stubenrath, Michael, Buxmann, Peter and Konig, Wolfgang, (1999), “Internet-Based Corporate Reporting – Filling the Standardisation Gap”, Proceedings of the 32nd Hawaii International Conference on System Sciences. Xiao, Zezhong, Jones, Michael John and Lymer, Andy, (2002), “Immediate Trends in Internet Reporting”, European Accounting Review, 11: 2, 245-275.