Building Public Trust: The Future of Corporate Reporting

by Samuel A. DiPiazza Jr. and Robert G. Eccles

Business reporting in a post-apocalypse global marketplace Clearly, now is the time for creating an effective business-reporting model appropriate for the markets of the twenty-first century. Rather than start from scratch after the Enron-Andersen fiasco, two leading consultants from PricewaterhouseCoopers present a plan that supplements the current model, one in which executives, accountants, analysts, investors, regulators, and other stakeholders...

• Format: Hardcover
• Language: English
• ISBN: 0471271349
• ISBN13: 9780471271345
• Release Date: January 2002
• Publisher: John Wiley & Sons
• Length: 188 Pages

Customer Reviews

Confidence Game

There is a risk that this thoughtful proposal for a new way of formatting business disclosure will be overshadowed by the spectacular bankruptcies and accounting scandals of the day. What the market appears to be looking for in the summer of 2002, with headlines of business disasters at Enron, Global Crossing, Adelphia Communications, and WorldCom, are corporate wrongdoers in orange jumpsuits and silver bullet solutions from the SEC and Congress. But "building public trust" requires a more patiently developed strategy as well as immediate action. The underlying issue here is a spirit of transparency, a charged word for anyone in the "corporate reporting supply chain" (viz., corporate captains, accountants, security analysts, investors). Transparency is nothing less than a legal and ethical obligation to make available sufficient information on which to base an investment decision. More transparency will not prevent business failure, the capitalist's place of Hell, but it does offer the promise of fewer shocks, less investor pain, and a more efficient deployment of capital. Samuel A. DiPiazza Jr and Robert G. Eccles call for a three tiered approach to reporting this information. It is a holistic approach in search of the "real economic entity" and an attempt to move away from the obsession with quarterly earnings numbers, the so-called "earnings game". Is there a place for pro forma earnings? Pro forma earnings, so maligned, may have a useful role for highly acquisitive companies where unusual events are a pattern. But pro forma should be supplemental to GAAP [Generally Accepted Accounting Principles] not a substitute. At the base of the authors' three tiered model is a reconciliation of GAAP with other country-based standards to achieve a Global standard. At a second level of disclosure industry specific issues need to be reported and evaluated. It makes sense that an R & D pipeline of new drugs is critical to a pharmaceutical company, while inventory turnover is paramount to a warehouse retailer, and market share gains the key value driver for a computer manufacturer. While progress has been made on setting global accounting standards, much work is needed by industry associations to define and measure values especially important within their sector. Tier three information would also report on many nonfinancial issues identifed by a company as important to them in particular such as initiatives on product and service quality, customer loyalty, employee satisfaction, etc. If these matters are, as surveys show, a high priority with companies, they should be reported, evaluated, and factored in investment decisions. The internet offers an opportunity to make this information available on a continuous basis. The use of XBRL (Extensible Business Reporting Language) by Microsoft, Morgan Stanley, and a few other companies allows information to be 'tagged' with a contextual description for retrieval wherever it is buried. Accessibility is just another as

Brilliant - Everyone ought to read this

A most insightful and timely book that is a must read for regulators, politicians, businessmen, investors, and everyone interested in - and worried about - the state of public trust today. A well written book that lays out some useful and practical advice for changing our approach to and processes for corporate reporting. Best of all the advice is applicable to the world of business immediately - without changing the way we do business completely as Congress is currently debating.This book is destined to become a classic in its field. therefore, buy it, read it, but don't loan it - because you ought to keep it on your bookshelf and refer to it. If you ahve any interest in investing, this is the best [amount of money] you will ever spend.

Another Homerun

Working with Price Waterhouse Cooper, Robert Eccles has delivered the perfect companion to his last book, "The Value Reporting Revolution". If you're interested in investing or just trying to understand what is happening in the world of business, there is no excuse for not reading this book. Not as complex as his last book, "Building Public Trust" is a concise overview of what needs to change in America's accounting system. A quick read and very informative.

Packed with Knowledge!

In the wake of the Enron bankruptcy, there has been plenty of teeth-gnashing about what went wrong, but far too little analysis of what we can do to make things better. Samuel A. DiPiazza, Jr., CEO of PricewaterhouseCoopers, and Robert G. Eccles, a PwC fellow and former Harvard Business School Professor, take a brave stab at addressing the fundamental shortfalls in the process through which companies report their performance. By proposing a new vision of corporate transparency, the authors take an important first step in reforming the corporate reporting system and restoring investor confidence. We from getAbstract highly recommend this book to any readers wondering where the financial community should go from here.

Building Public Trust: The Future of Corporate Reporting

The public trust in corporate America has been shaken in the wake of several recent accounting scandals and, as a result, the capital markets are in upheaval. There is, rightfully so, a public outcry for reform - the government has cranked up its regulatory machine and members the class-action plaintiff bar are sharpening their litigation pencils. Many question, justifiably so, whether such attempts at reform are the legal equivalent of putting a bandage on a gunshot wound. In addition, investors and other stakeholders query whether there can be any meaningful reform to the extent that special-interests and their representatives (lawyers and accountants) are successful in jockeying for position in these efforts. Messrs. DiPiazza and Eccles present a compelling blueprint for wholesale restructuring of corporate reporting and the concomitant rebuilding of public trust in the capital markets. The foundation for their model is built on the values of transparency, accountability and integrity. Their model -- development of a global GAAP, development and application of industry-specific standards, and establishment of guidelines for disclosure of company specific information -- makes sense given the expansion of capital markets across country-specific boundaries, but also is timely given the wide-availability of enabling technology (i.e., the Internet and XBRL). Meaningful reform cannot be had solely through governmental reform, the lobbying of special interest groups, self-regulation or lawsuits by regulators and disgruntled investors. The end results will likely be half-baked attempts to address the symptoms of the breakdown in corporate reporting and the capital markets, rather than development of a cure. Accordingly, DiPiazza and Eccles stress that meaningful reform through development of their three-tiered model must be had through open dialogue and lines of communication with all members of what they term as the "Corporate Reporting Supply Chain" which, in a nutshell, includes all stakeholders in the capital markets. "Building Public Trust: The Future of Corporate Reporting" provides, in plain English, a detailed description of the problems plaguing corporate reporting and roadmap to a meaningful solution. The road to reform, however, is long and, as DiPiazza and Eccles suggest, requires that the journey (read: participation) be undertaken by ALL members of the Corporate Reporting Supply Chain. The book is a must read for corporate directors and officers, regulators, lawyers, accountants, analysts, the investing public and all other persons who (or whose clients) have a stake in the smooth functioning of the capital markets. The time for open debate on reform is now. It is up to members of the "Corporate Reporting Supply Chain" whether they want such reform to take the form of a lecture leading to mandates by the few, or an open dialogue leading to a consensus by the majority. This book provides its readers with a grounding for developing the too