CHAPTER TWO

Developments in new reporting models

AT THIS JUNCTURE, CONSIDER Developments in New Reporting Models, published by the Institute of Chartered Accountants in England and Wales at the end of 2009 and available at www.iasplus.com/uk/0912newreportingmodels.pdf. This publication looks at calls for a new reporting model, for both financial and non-financial reporting. It argues that business reporting must adjust to reflect changes in business, in information technology and in users' needs. Naturally, this is a perpetual process. Yet business reporting is best viewed not in terms of models but as a complex social institution, one which constantly evolves in response to changes in its environment.

Market forces, regulation, ethical and emulatory motives, as well as pressure from participants in public debate, all push business reporting to adapt to changing circumstances. The debate about the future of business reporting therefore needs to be reframed, and not as a stark choice between an old model and a new one but in terms of the need for continuing evolutionary improvements.

The contents of this 109-page publication are as follows:

• Tables and research findings
• Executive summary
• The challenge
  • Summary
  • Calls for reform
  • Business reporting and reporting models
  • Delivery and access
  • Criticisms of ‘the current model'
  • Changing criticisms
  • Rhetoric and reality
  • Different societies, different reporting practices
  • Structure of the report
• Financial reporting fundamentals
  • Summary
  • Criticisms of ‘the financial reporting model'
  • Inherent limitations: is financial reporting useful?
  • Financial reporting: the strengths of its limitations
• Accounting for intangibles
  • Summary
  • Relevance of the question
  • The charges
  • The historical perspective
  • Is financial reporting misleading investors about intangibles?
  • Intangibles: income v the balance sheet
  • Putting all intangibles on the balance sheet
  • Difficulties in the debate on intangibles
  • Improving financial reporting for intangibles
• Financial reporting and the financial crisis
  • Summary
  • Past and future work
  • Current value accounting: a broken model?
  • Historical cost accounting: a broken model
  • Recognition and disclosure problems
• Non-financial reporting
  • Summary
  • Is there a non-financial reporting model?
  • The case for a non-financial reporting model
  • Problems with a non-financial reporting model
  • A comprehensive model
  • Greenhouse gases: measurement and reporting
  • Mapping users' information needs
  • Success drivers and business models
• The development of business reporting
  • Summary
  • An evolving institution
  • The wider context
  • Business reporting as a market activity
  • An ethical endeavour
  • A source of emulation and prestige
  • A regulated activity
  • Recent changes in the market for information
  • Systemic issues
  • Reasons for optimism
• Length and complexity
  • Summary
  • The problem
  • Possible solutions
• The way forward
  • Summary
  • The rhetoric of public debate
  • Reframing the debate
  • The importance of research
• Appendix 1: Proposals discussed in New Reporting Models for Business
  • The Balanced Scorecard
  • The Jenkins Report
  • Tomorrow's Company
  • The 21st Century Annual Report
  • The Inevitable Change
  • Inside Out
  • Value Dynamics
  • GRI
  • The Brookings Institution
  • Value Reporting
  • The Hermes Principles
• Appendix 2: Recent developments
  • Significant contributions to the debate
  • Significant developments in practice
  • Inquiries into complexity
• Appendix 3: Six underlying questions
  • Can business reporting meet all decision-making needs?
  • Can business reporting benefit from a new conceptual framework?
  • Can business reporting depend on the invisible hand?
  • Can business reporting attach values to all intangibles?
  • Can business reporting achieve transparency?
  • Can business reporting serve multiple stakeholders?
• Appendix 4: ICAEW-commissioned research
• Appendix 5: Opportunities for further research
• Acknowledgements
• Bibliography