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Corporate reporting is an essential means by which companies communicate with stakeholders as part of their accountability and stewardship obligations. This paper puts forward ideas for corporate reporting to evolve in a way that will keep pace with the developing economic reality and address the needs of a wider stakeholder audience. This process of communication and accountability has consequences for a broad range of constituents, and as a result the suggestions in this Cogito Paper should be of interest to politicians and policy makers, (accounting) standard setters, regulators, enforcers, companies and the broad range of their stakeholders including investors, and, it goes without saying, the accountancy profession that FEE represents.
Rapid changes in the broader business environment, including questions raised by the financial crisis, have increased concerns over whether corporate reporting is continuing to fulfil its objectives. There is already a vast amount of literature and an increasingly public debate on the future of corporate reporting. In addition, an increasing number of companies worldwide are already in the process of improving their corporate reporting in practice, often by way of experimentation. This demonstrates that the momentum for change towards better communication and improved accountability is building. However, a common view has yet to emerge even on what the problems are, let alone how to adapt corporate reporting to fix them in order to achieve a better depiction of the economic position and performance of entities.
This paper focuses on those areas that are likely to drive future developments in corporate reporting. It explores different ways of addressing the main challenges in these areas in order to stimulate discussion among different constituents.
Technology will undoubtedly play an important role in the evolution of corporate reporting in the future, both as a driver and an enabler for change. As a starting point, corporate reporting needs to keep pace with changes in technology. Some even believe that unless corporate reporting keeps up with these changes, it may lose some of its relevance and importance. Technology will significantly change the way that corporate reporting is prepared and the way that it is delivered to its audience. Having said that, technology should not merely allow entities to produce more information, but should instead enable them to provide information that is more relevant and timely.
It cannot be predicted exactly how technological changes, including the extended use of mobile devices, big data and other key developments, will affect corporate reporting in the future but it seems highly likely that it will have a significant effect.