Accounting: Should Not We Think Differently, but Logically

Select a public limited company from KSE quotations and pick up its annual reports for last consecutive 10 years. You will notice the following:

• That the number of pages of the annual reports in your hands over last 10 years has been doubled. This is regardless of the fact that the production and business volume might had been cut down to one half. The past trend of direct proportion between company profits / losses and annual report lookup is now no longer exists and you could not even guess a company’s performance by gazing the cover page of annual report!

• That the reports have become more and more colorful rather can be said to have incorporated “the multimedia”. Benefits of automation and IT developments are being enjoyed by everyone and annual reports are no exception!

• That the financial information is preceded and followed by colorful photographs. The nature of these photographs differs from company to company and the regression curve may depict that in future these photos may look like those on some fashion magazine! This would add to the ultimate demand of annual reports and we shall have to incorporate another “user” group in our accounting studies.

• That one has to turn plenty of pages before one can reach to some purposeful informative page. How ever, this has definitely added to the income of printers and to some extent, of the auditors as well.

• That more and more technical, difficult and complex terminology is being used in the disclosures to the audited accounts which make the common reader understand that accounting profession is really “something” and that this something is really “something difficult to grasp”.

I have no concrete statistics to support whatever I am writing next, but I assume you would agree with the same if you think and evaluate unbiased.

• That the number of readers has inversely reduced to the number of pages over last ten years. That is, when pages are more than doubled, readers are more than halved.

• That those still evaluating annual reports information have confined themselves to only a few limited number of pages, which to them are relevant and useful.

• That despite so much detailed and incorporating such a variety of financial information, the specific object oriented user groups also do not take the annual reports as conclusive. Make a loan application to a bank and submit your company’s annual report and wait for the loan to be disbursed in your company’s account! Logically, the documents required to be submitted in such a scenario should be reduced over time as the annual audited accounts now carry variety of information along with them in annual report. But the opposite is the case. The number of documents