For nearly a decade, the AICPA has advocated a modernized financial reporting process that provides more and better information from which investors, creditors and management can make decisions. The highest quality auditing will be of declining value if the underlying information is outdated or excludes relevant factors.
Using the current one as a base, the new business reporting model would encompass five fundamental elements: reliable systems to collect and analyze information; industry-specific financial and nonfinancial performance measures; better quality disclosures written in “plain English”; corporate accountability; and real-time distribution of information. These fundamentals must integrate within an organization, as an organization moves toward online, real- time reporting. Achieving the online, real-time goal is the only way to truly meet marketplace demand for more relevant, up-to-theminute information.
By supplying a broader “bandwidth” of information that addresses such issues as off-balance-sheet activity, liquidity, nonfinancial performance indicators and unreported intangibles, financial reporting can begin to address the complexities of today's corporations.
“Our current financial reporting model, although a solid foundation from which to start, is neither complete nor timely,” said Senior Vice President-Member and Public Interests Al Anderson in a recent interview. “Stakeholders now want more information and `data on demand' using technology formats that allow quick access and analysis to help make better decisions.”
A special committee, established by the AICPA Board of Directors and operational next month, will build a migration plan for moving the elements of the current model to the online, real-time business reporting framework. AICPA committee representatives from assurance services, consulting services, the Auditing Standards Board, accounting standards, business and industry, government, PCPS-the Alliance for CPA Firms and the board of directors will comprise the special committee. The committee will engage several constituencies and have various task forces working toward the common goal of making all five elements successful.