Gaps between Technology and Professional Response

User Access to IFR

We argue, however, that Acrobat does not represent a long- or even medium-term solution to IFR. We argue that Acrobat fails three important tests: (1) the files that must be downloaded are too large for all but those with a high speed link to the Internet, (2) extraction of semantic meaning from the reports is difficult or impossible and (3) the contents of the reports are not indexed on the major search engines. We consider that we are at a point where the benefits of HTML/XML/XHTML are beginning to outweigh those of electronic paper (i.e. Acrobat). A major driver of this change is the advent of XBRL, a technology to which we will return shortly.

Presentation of IFR in HTML, XML or XHTML to a greater extent, or in Adobe Acrobat to a lesser extent, give rise to a number of issues in terms of the manner in which users access IFR. There are three principal ways that users retrieve IFR. First, users proceed directly to the corporation’s Web site, and follow links to the IFR component on the Website. They follow links typically titled “Investor Relations” or “Annual Report.” Once at the Investor Relations portion of the Website, they access a variety of information, most of which is not audited. Given that Acrobat documents are not indexed on most search engines, this often circuitous route is the manner in which most users will be forced to retrieve IFR information. Second, they search for information on a general-purpose search engine such as Google.com or AltaVista.com. From the results of the search they navigate directly to one of the pages on the corporate Website, or to some other Website that will usually not be associated with the corporation in question. Third, they access information on third party sites. In the US context this would include information that has been derived from filings under the SEC’s EDGAR system. Information accessed under this category also includes third party information intermediaries such as Hoovers.com, which provides free, pay-per-use and subscription services to corporate performance databases.

The audit guidance discussed in the previous section seems, in our view, to assume that most users access IFR by the first of these options, i.e. by users navigating to the corporate Website. The UK APB recommendation that management provide warnings within these links that a user is moving from audited to unaudited information is an example of the navigation styles to be used by information consumers. Such guidance is entirely futile should users navigate directly from a general purpose search engine to a particular page on the corporate Website or if they extract information from a third party’s information database. Such suggestions are entirely reasonable in the short-run – indeed we made similar suggestions in our report to the IASC – but do not represent a realistic solution to the practical ways in which users access their desired IFR. The most popular sites on the Web are search engines (e.g. Google.com) or information portals (e.g. Yahoo.com – and of course such information portals provide search engines as a bookend to their portal services). We need to establish methods for providing assurance to users on the status and authenticity of individual reporting elements and not just complete packages of information or by providing dialog boxes to advise users that they are about to access information on a page that has not been subjected to an audit.