The Future of Financial Reporting: Meeting the Changing Demands for Accounting Information
This paper discusses the effects on the accounting profession of recent and future changes in the demands for information. It also discusses potential benefits and costs for accountants as they adapt their services to provide extra value in this changing world. A Case is made for the continuing need for verifiable information to confirm information from non-accounting sources, and the paper presents support for continuous access to accounting information (as opposed to periodic reports) and an expanding scope of available information. Companies world-wide have entered an information age. Global companies are increasingly competing on the basis of the quality of their information. Therefore, demands for information, including accounting information, has increased and will continue to grow. The main issue facing accountants is how this huge demand for all types of information will affect what we have traditionally considered as accounting information. Will accounting information continue to be the mainstay for assessing the financial performance and position of companies? Or will it be supplanted, at least partly, by information from other sources? Let’s consider two possible scenarios for the future of accounting: 1) The good news scenario - demand for accounting information soars as financial information becomes a more and more important tool for decision makers in this information age. As technology allows accounting information to be increasingly timely, flexible, and complete, accounting information takes its place as the dominant competitive tool of the twenty-first century. 2) The had news scenario - accounting information becomes increasingly obsolete. The information age is already creating many information specialists, and they may compete with accountants. If accountants do not adapt their production of information to meet marketplace demands, and if they do not take advantage of the opportunities created by technology, accounting information may decline in value, and accountants may receive a reduced financial reward for their efforts.