I don't consider myself a complex person. Never have.

My preferences for food, wine, clothing and even automobiles run fairly basic. Don't show me a Bentley; a sleek Chrysler 300 will do. I'm a huge fan of California wines, so don't try to impress me with a label from Bordeaux illustrated with a fancy circumflex.

And, by the same token, I don't like complicated things, i.e. instruction manuals or, for that matter, anything that spouts my three least-favorite words in the English language - "some assembly required."

So you can imagine my impatience when it comes to distilling complex financial information or even financial-related materials that make me work harder at basic comprehension than I feel I should have to.

Sitting on my desk is a copy of the 2004 financial report for McDonald's Corp. The report runs roughly 40 pages, which is certainly not over the top for a company that generated nearly $20 billion in revenues last year and operates roughly 32,000 restaurants - at least compared to the 100-plus-page behemoth issued annually by GE.

McDonald's MD&A section occupies roughly three-and-one-half pages of the tome, and overall the release is fairly straightforward, even the sections dealing with a problem that appears to have afflicted nearly every restaurant and retail chain in the country - lease accounting. Even I understood their explanation, if that's any type of litmus test.

But it also begs the question of whether everyone who has a portion of their hard-earned money in the company, or any publicly traded concern for that matter, could digest the information contained in the annual report.

In an era when there is a concerted cry to simplify the reams of financial information available to investors, you wonder how many of them actually take the time to read the annual report. Or, if their companies offer them a 401(k) plan, do they read all the accompanying literature before diverting a portion of their paycheck in hopes of a better retirement?

If there were a way to quantify a percentage of those that do, my guess is that it would be fairly low.

I'm harping on this simplicity kick because I recently attended a financial reporting conference in New York, where one of the meeting's main talking points centered on the subject of simplification.

Okay, if you think some annual reports are complicated, how would you feel if you had to engage U.S. GAAP, with its roughly 2,000 pronouncements?

Apparently, the Financial Accounting Standards Board listened to its constituency about how unmanageable generally accepted accounting principles are, and has embarked on what will be a multi-year GAAP codification project, where all pertinent information relevant to a category will be housed in one place.

FASB chair Robert Herz was more succinct in his appraisal of U.S. GAAP: "In technical terms, it's nuts."

The SEC's deputy chief accountant, Scott Taub, told the audience that financial reporting should be about honest communication, not merely an exercise in compliance.

Then, given that postulate, investors should begin to see quantum changes when their recreational reading begins to include annual reports written in, well, understandable language.


As McDonald's would say, "I'm lovin' it."

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