Roles
No single stakeholder group can effect the changes needed to enhance the business-reporting model. Thus, the time is right for an informed and objective forum comprising such constituents as the end-users, business corporations, accounting institutes, accounting firms (both global and local), and other interested stakeholders to develop global principles and criteria for generally accepted value measurement and reporting.
The Role of the Accounting Profession
Regarding the role of the accounting firms, the 2001 PricewaterhouseCoopers' publication, “The ValueReporting Revolution” asks, “What can accounting firms do to serve their clients, shareholders and other stakeholders, as completely as possible? What should they do, to get back to their former role of urging clients to do the right thing, rather than just the required thing?”
The answers to those questions provide the rationale for this effort: “They [accounting firms] can and should work with their clients to:
- Identify all the key components and value drivers.
- Become experts on the business processes and related controls surrounding the measurement of value drivers and financial and operating risks.
- Specify the relationships among value drivers (the “business model”).
- Develop methodologies for measuring value drivers.
- Participate in or even organize the industry consortia that will turn the methodologies into industry standards.
- Encourage their clients to report information on the measures in as timely and detailed a fashion as possible.
What is more urgent and important to all the stakeholders of the accounting profession than the opportunities and challenges in value measurement reporting and improvement? Who is more appropriate to assist all the stakeholders involved in assessing such performance, stewardship and accountability? If not us, who? If not now, when?
The Role of the Business Community
Organizations do not want to report more information than they need to, especially as most business executives feel they already are required to report enough information and they do not want to reveal any confidential information. However, the need for more information is not something to be determined internally, but by the markets. Transparency is becoming much more than a business reporting and corporate governance buzzword -- it is becoming a requirement for companies reporting information.
The Role of Government
The changes to the reporting model being contemplated will add more forward-looking information that, due to its very nature, will be subject to revisions as conditions change in either the overall market or within the company. Thus, governments around the world, and especially in the United States with its litigious society, will need to enact safe harbor rules to provide protection for management that makes forecasts of future events and valuations, provided the work is prepared with good faith efforts and information is shared in a timely manner with the investing community.
The Role of Investors
Management provides information not only for itself but also for the benefit of the government and of investors. And, investors, both big and small, are in the best position to tell management what information they find most useful. From the expensing of options to clearer information, the investors help determine the final results, and the results put forward by VMRC will be no different.
