Building Public Trust: The Future of Corporate Reporting

Rating:
Summary: Brilliant - Everyone ought to read this
Review: 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.

Rating:
Summary: Building Public Trust: The Future of Corporate Reporting
Review: 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 tools to accomplish the latter...

Rating:
Summary: Hollow advice from a company that betrays its own employees
Review: There is a bitter irony to the heads of PriceWaterhouseCoopers issuing a publication about inspiring trust in the public in large corporations in the wake of Enron and Worldcom scandals when PwC constantly undermines the trust of its own employees. With an infrastructure that makes it nearly impossible for employees to find their own project work and employment practices that left thousands of employees without a job and insufficient experience to get another one (while still continuing to hire new employees), PwC does a horrible job on taking care of those who work for them. In addition, they are just another example of a company that engages in the same shady, conflict-of-interest business practices as Arthur Andersen, yet they just have not been caught yet. Yet, here they are, trying to issue some sort of definitive work about restoring public trust. If a company like this shows no understanding of how to take care of their own employees, how can one even remotely think that they have any business providing a framework of how to take care of the public.

Rating:
Summary: Confidence Game
Review: 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 aspect of transparency. This is a slim book with an ambitious agenda that should be read by board members of publicly reporting companies.

Rating:
Summary: An Important Read
Review: Who could have guessed that corporate accounting would ever be the stuff of headlines? Unfortunately, it's a rather dubious distinction coming with the collapses of Enron and Worldcom. The time is nigh for the green eyeshade brigade to respond.
Building Public Trust is just such a response - from the leadership at PricewaterhouseCoopers. But Building Public Trust is not the Big 4 accountancy's knee-jerk defense to distance the firm from the corporate scandals that knocked out its Big 5 brethren, Arthur Andersen. The book goes way beyond proposing stop-gap measures that plug holes in reporting and enforcement. Rather, the authors take a progressive stance that outlines new levels of reporting transparency, accountability and integrity - to shore up investor confidence and stabilize capital markets for the long haul. If you want to understand where corporate reporting SHOULD be headed, check out this book.

Rating:
Summary: Another Homerun
Review: 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.