Quarterly Financial Reporting is Easier than Ever
President Trump waded into regulatory policy in characteristic style this August with a tweet that has ignited debate: “Stop quarterly reporting & go to a six month system[…] That would allow greater flexibility & save money. I have asked the SEC to study!”
Companies siding with President Trump cite the cost of compliance and the focus quarterly reporting puts on short-term profits as reason to dial-down the disclosure timeline. It is also true that in Europe publicly listed companies are only required to report results semi-annually rather than quarterly like U.S companies – although many opt to voluntarily provide a range of information in “off” quarters as well..
Would a six-month system really save money? As we reported last week, a recent AICPA study showed that XBRL filing costs for small companies has dropped 45% since 2014.
Would the shift to semi-annual reporting actually mean that public companies take a longer term view, or more actively invest for long term value? There is plenty of evidence to suggest that corporate behaviour is not impacted by frequency of reporting.
Regardless of reporting requirements, companies monitor their own performance at an increasingly detailed level. Collecting, consolidating and reviewing financial results at least monthly is now the norm for most companies, with automated integration of data making this a time-light task. For publicly listed companies who need to file their financial results with the SEC, XBRL tagging tools and services can automate the filing process at a low cost.
Accounting Today predict that the proliferation of modern performance management and analytics software solutions, coupled with the volatility of today’s markets, means that companies will move towards more detailed data analysis and management, irrespective of SEC requirements. It will no doubt be an interesting debate!
