Database of Materials on Users' Needs for Information
Introduction and Overview
The AICPA formed the Special Committee on Financial Reporting in 1991 to address concerns about the relevance and usefulness of business reporting. The Committee's charge was to recommend (1) the nature of information that should be made available to others by management and (2) the extent to which auditors should report on the various elements of that information. The Committee completed its work in September, 1994.
Successful businesses align the features of their products and services with the needs of their customers. So too should the providers of business reporting align its features with the information needs of those who use it (primarily investors and creditors, including potential investors and creditors, and their advisors who use business reporting as a basis for their capital allocation decisions). Thus, the Committee focused on the information needs of users to help identify and evaluate ideas for improvement in business reporting.
The Committee studied the information needs of users and identified the types of information that users believe is most useful in predicting earnings or cash flows to value equity securities and to assess the prospect of repayment of debt securities or loans.
This database includes material from that study, which the Committee is making available to assist others in their research of the information needs of investors and creditors. It also includes the Committee's bibliography.
The database is divided into seven sections. Those sections are listed and described below.
I. The Committee's analysis of information needs of investors and creditors (112 pages)
This document summarizes the Committee's analysis of users' needs for information based on the information included in Section II of the database. The introductory material on pages 1 through 18 discusses the objectives, scope, basis for analysis, guiding principles, and organization of the analysis.
II. Material extracted from documents authored by users or based on research directly with users about their needs for information (about 1,200 pages)
The objective of the material is to organize what investors and creditors have indicated about their needs for information in a manner that best facilitates analysis. Thus, the materials are organized into categories and subcategories, as listed in the introduction to the materials.
The materials are extracted from direct documents, which are authored by users, or based on research directly with users. The materials include extracts from the direct documents listed at the front of the database.
In addition to extracts from previously published documents, the materials include extracts from new research sponsored by the Committee. New research resulted from the Committee's formal discussions with investors and creditors. The materials include the transcripts from those discussions, divided topic by topic. The second type of new research infers users' information needs based on the contents of analysts' reports. Extracts from that research is also distributed across various topics within the materials. Further, the study of analysts reports is included in section III of this database.
The introductory material (pages 1 through 9) discusses the objective, organization, contents, and format of the materials.
III. Content analysis of sell side financial analysts reports (48 pages)
This research infers users' information needs based on the contents of sell side analysts reports. Excerpts from this research are also included in section II of the database.
IV. Content analysis of information voluntarily supplied by companies to users (35 pages)
The Committee also sponsored this research, which was not completed in time to be included in Section II. The research is based on documents that certain public companies who agreed to participate in the study provided to users.
V. Survey of investors and creditors (61 pages)
The Committee sponsored the survey to confirm or refute with a large number of users its conclusions about users' needs as discussed in its analysis (section I of the database).
The survey is in three parts. The first is the Committee's analysis of the survey, which compares and contrasts the results of the survey with the Committee's conclusions in its earlier analysis. The second is the results of the survey, with commentary by Louis Harris, who conducted the survey. The third is the survey instrument.
VI. Report of the Committee's Breakthrough Task Force (21 pages)
The Committee sponsored a task force of experts in various disciplines to help the Committee develop a longer term perspective. The Task Force considered the
directions in which business information is likely to evolve as a result of changing social, political, economic, technological, regulatory and other forces. Section VI includes the Task Force's report.
VII Bibliography of source documents referred to by the Committee (10 pages)
The bibliography lists many of the published documents that the Committee considered in developing recommendations, including documents about users' needs for information as well as other matters.
Acknowledgments
The Special Committee is grateful for permission received from the authors to quote in the database from the following documents:
Investor Information Needs and the Annual Report, © Financial Executives Research Foundation, 1987
An unpublished paper prepared by the Accounting Policy Committee of Robert Morris Associates, Summary of Important Positions Related to Accounting Principles and Auditing Standards, © June 1990
A letter from the Accounting Policies Committee of the Robert Morris Associates to Larry Grinstead © and dated September 16, 1992
Permission to include portions of transcripts taken from interviews performed by the FASB Oversight Committee of the Financial Accounting Foundation was obtained from the Financial Accounting Foundation, © Financial Accounting Foundation.
Report of Association for Investment Management and Research, Corporate Information Committee Including Evaluation of Corporate Financial Reporting in Selected Industries for the year 1989-90, © AIMR, 1990
Report of Association for Investment Management and Research, Corporate Information Committee Including Evaluation of Corporate Financial Reporting in Selected Industries for the year 1990-91, © AIMR, 1991
Report of Association for Investment Management and Research, Corporate Information Committee Including Evaluation of Corporate Financial Reporting in Selected Industries for the year 1991-92, © AIMR, 1992
Unpublished paper prepared and © by the Association for Investment Management and Research, Comments of Association for Investment Management and Research on Matters Addressed in Interview Guide of Oversight Committee, Financial Accounting Foundation, April 3, 1991
The Financial Services Industry ¾ Banks, Thrifts, Insurance Companies, and Securities Firms, © AIMR, September 1992
AIMR Position Paper, Financial Reporting in the 1990's and Beyond, © AIMR, July 1992
Estimating Fair Values for Financial Instruments: Disclosure and Beyond, a Study Prepared for the Association of Reserve City Bankers (Washington, D.C.: © KPMG Peat Marwick, 1992)
Hill and Knowlton, Inc., The Annual Report: A Question of Credibility ¾ A Survey of Individual and Professional Investors, © Hill and Knowlton, Inc., October 1984
Towers Perrin, FAS 196 and the Equity Markets: "Big Bang" ¾ or Nonevent, © Towers Perrin, October 1992
S & P's Corporate Finance Criteria, © Standard and Poor's Corporation, Spring, 1992
Unpublished paper © by Jean-Louis Betriou, Gèrard Ewenczyk, Jacques Meriaux, and Kaspar Muller, Financial Analysts' Requirements in the Field of Accounting Data
Louis Harris, A Study of the Attitudes Toward an Assessment of the Financial Accounting Standards Board, © Louis Harris and Associates, 1985
NOTES:
The electronic version of the database is in Microsoft Word for Windows©
The page numbers in the hardcopy of the database may not agree with the page numbers in the electronic version because of differences in fonts.
A number of pages in Section II of the hardcopy of the database, Material from Documents Authored by Users or Based on Research Directly with Users, have been photocopied from Louis Harris, A Study of the Attitudes Toward and an Assessment of the Financial Accounting Standards Board, Louis Harris and Associates, Inc., 1985, rather than entered in the electronic version and printed from that version. The pages therefore do not appear in the electronic version. The following are those pages in that section of the hardcopy:
1.a.57
1.b.133, 135-144
1.c.85
1.d.15-21
2.a.9-10
2.b.41, 43-45, 47-48
2.c.27-31
4.147-148
5.a.45-48
12.15-18
13.43-44
18.d.11
18.e.17-19, 21-61, 63-65, 67-82