Scots slate financial reports
Financial reporting is failing to meet user needs for timely, forward-looking information on companies’ performance, according to a report published by the Scots ICA.
The study, ‘Business Reporting: The Inevitable Change?’ found high levels of dissatisfaction with the current cycle of financial communications among 308 financial directors, auditors, investment analysts, fund managers and small shareholders.
Fewer than half the respondents were satisfied that the sequence of preliminary reports, analyst meetings, annual reports and agms, could provide timely information. Only 24% said this cycle provided a good basis for assessing future performance.
The study also condemned the unfair advantage enjoyed by analysts who attend one-to-one meetings with company managers. Some 74% said such meetings created the perception of unfair advantage, while 48% believed there was an actual gain. Two-thirds, however, said the market as a whole gained from such meetings.
Technology, such as online libraries of financial information, could cure some of the shortcomings, the report concluded. Printed minutes from face-to-face meetings could eliminate the disadvantage to those who could not attend.
‘There will always be a gap because professionals have more time and are better at unscrambling the messages,’ said Cambridge accounting professor Geoff Whittington.
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