I have a friend with an accounting degree and a law degree who complained about the length and complexity of the annual reports, including those of General Electric (108 pages), Citigroup (242 pages), Warner Music Group (142 pages), Pfizer (170 pages) and Bank of America (192 pages).

He blames the Securities and Exchange Commission and the Financial Accounting Standards Board, among others, for the extensive required verbiage in the annual reports.

In addition, the CEOs are sometimes verbose in the report. GE's Jeffrey Immelt's "Dear Fellow Owners" was eight pages. Management's discussion and analysis for GE was 29 pages. The company's "Notes to Financial Statements" was 44 pages.

I asked my friend, "What's your problem?" He responded, "I can't understand why the annual reports have to be so long and confusing to the average person."

I said, "If you, with two degrees, do not comprehend these annual reports, how can someone with just a high school diploma understand them?"

What this writer is driving at is that there should be a simple four-page brochure which can fit into the inside pocket of a man's jacket or a lady's purse.

All four pages would be headed with the company's name and "12 months ended."

* Page 1 should contain the CEO's letter. One page should suffice.

* Page 2 should contain the company's assets, i.e., current assets, cash and equivalent, receivables, inventories, total current assets, plant and equipment, net of depreciation, other assets, and total assets.

* Page 3 should contain liabilities and capital, i.e., accounts payable, other current liabilities, long-term debt, total liabilities, corporate stock, surplus, and total capital.

* Page 4 should contain statement of operations, gross income, costs and expenses, income before taxes, taxes, and net income.

This writer is a CPA interested in the welfare of the accounting profession, but feels sorry for the average stockholder who owns shares in GE and cannot absorb the 108-page document.

Reading this new mini report over and over again would tell a story that the voluminous annual report misses. The mini report could be a big improvement.

Eli Mason, CPA, is a past president of the New York State Society of CPAs, a past chairman of the New York State Board for Public Accountancy, and a past vice president of the American Institute of CPAs.

(c) 2009 Accounting Today and SourceMedia, Inc. All Rights Reserved.

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