Magazine article The CPA Journal

The Internet: Changing the Way Corporations Tell Their Story

Magazine article The CPA Journal

The Internet: Changing the Way Corporations Tell Their Story

Article excerpt

The electronic age has already affected the way that financial information is disseminated. Many corporations disclose quarterly and annual report data on the Internet. The authors discuss this and the potential of the Internet to change the way decision makers can use this readily available information.

Annual reports continue to be one of the primary sources of communication between corporations and users of financial

information. While annual reports routinely include quality photographs and extensive graphic representations, the electronic age has launched a new era for informing stockholders. Several corporations have even included CD ROM disks with hard copies of their annual report. Corporations are beginning to use the Internet to provide information about themselves. To remain competitive, managers must be aware of how customers, stockholders, lenders, and regulators expect to receive information about their corporation.

How the Internet Disseminates Information

The Internet is a collection of information stored on electronically connected computers all over the world. A computer that is capable of storing Internet-accessible information is known as a server. Most computer users in the industrialized areas of the world may observe, or browse, data stored on the Internet at a relatively low cost. While the Internet is criticized for being vast, disorganized, and confusing, it provides excel

lent opportunities in education, commerce, and entertainment.

Information on the Internet is typically stored in a web site maintained on a server. The home page of a web site is the primary screen of a web site that usually provides guidance to other infor

mation provided in the web site. Each page in a web site is identified by a unique address known as a uniform resource locator CURL) that contains three parts (see Exhibit 1). The first part identifies the interpretive language-- most corporate home pages use Hyper

Text Transfer Protocol (HTTP). The second part of the URL identifies the server that stores the information. The file on the server in which the data is contained is identified in the last part of the URL.

Most information on the Internet is displayed in a series of screens with expressive lettering and color known as hypertext. By clicking certain words or graphics on the screen known as links, access is gained to other screens in the hypertext format. In financial accounting applications on the Internet, hypertext has been used to break down annual reports into usable segments. For example, (see Exhibit 2) Ford Motors' web site (http://www.ford.com) presents a summarized annual report separated into eight linked topics. These segments are accessed by clicking on the appropriate topic or link.

Hypermedia enhances hypertext by adding video, sound, animation, and graphics. Computer languages, such as Jave(TM), are specifically designed to accommodate hypermedia on the Internet. As more users begin to utilize these languages, hypermedia is likely to become widespread on the Internet. Hypermedia is appealing for displaying annual reports because it presents information with sound and movement. Several companies have already incorporated hypermedia in their Web sites. For example, Southern

Co. (http://www.southernco.com) contains an audio clip of a short speech by the CEO concerning corporate goals and accomplishments. A word of caution is in order. Depending on your equipment, it may take up to five minutes to bring the speech into memory which, when activated, results in an audio message that lasts for about 50 seconds.

Hypermedia also has the ability to perform interactively with the user. Interactivity is currently limited to the ability to search an annual report for specific data. However, the potential for interactivity with the financial statement user is exciting. Software developers are currently attempting to make their applications compatible with the Internet. …

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