2(d). Other
The APC [Accounting Policy Committee] is aware that there are costs to financial statement issuers of providing new accounting data or strengthening auditing standards. When new standards are promulgated, those costs should be exceeded by the value of two benefits. First is the potential benefit to individual borrowers of the lower borrowing costs afforded by the reduction in risk associated with reliable and understandable financial information. The second benefit inures to the economy as a whole from improved optimal capital allocation decisions made by well-informed lenders. [RMA90, p. 2]
Understandability is an important characteristic of accounting data. The [following item] listed below [is] vital to understandability. [RMA90, p. 3]
Going concern applicability: Financial accounting standards should be promulgated to apply to going concerns, i.e., viable operating enterprises. Enterprises in liquidation, bankruptcy or other financial distress are not susceptible to measurement by the standard accounting model. [RMA90, p. 3]
__________
[Fifty-eight] percent of the individual [investors] said annual reports were often too promotional. [HILL KNOWLTON, p. 6]
[A Baltimore security analyst said that annual reports are] used as sales tools. [HILL KNOWLTON, p. 6]
"The annual report is little more than a piece of advertising." (St. Louis brokerage firm analyst) [HILL KNOWLTON, p. 7]
__________
Readability is the subjective evaluation of the degree to which the annual report can be understood by the reader. Readability is not an issue for the professionals. They are comfortable with the language used; the complexity does not impede them; jargon is understandable; financial statements, while complex and not always clear and concise, are not a problem. They have complained, though, that graphs without labels on the axes are useless and that glossy paper can be difficult to read and nearly impossible to write on (which is especially irritating when financial statements are printed on glossy paper). [SRI, p. 62]
Individuals find annual reports somewhat less readable than professionals. For them, readability is sometimes a problem, but not a critical one. The financial information in annual reports is the most difficult to understand for most individual investors, but many can master it with effort. [SRI, p. 62]
A significant number of both individual investors and professionals state that the appearance of annual reports does influence their views of the company and that it can provide subtle clues. An overly glossy, slick, obviously expensive annual can convey overtones of "hype," of putting on a brave face (for troubled companies), or of wasting the shareholders' money. In contrast, when the annual is obviously cheaply produced, the impression conveyed is that the company has to pinch pennies, which may be a sign of trouble. [SRI, p. 62]
The range of cheap to expensive within which annual reports are expected to fit seems to be subjective. Investors are not specific about their perceptions of expensive and cheap, but they ". . . know them when they see them." A lavish 100th anniversary report or a skimpy turnaround company report would be understandable, but companies whose annuals fall outside that range with no apparent reasons are sometimes perceived to have problems. [SRI, p. 62]
Neither individual investors nor professionals say they want less detail in annual reports. Both groups, however, do want reduced complexity and a presentation that facilitates their extracting meaning from annuals. Professionals have the further need to increase the efficiency with which they conduct their investment analyses. [SRI, p. 63]
Virtually none of the professional investors is bothered by detail; on the contrary, they want more of it. Even those who do not expect to use all the data presented in an annual report still want access to as much detail as possible. [SRI, p. 63]
Individual investors are not so consistent--some find annuals too detailed and too complex, some want more detail, as shown in [the] [below] table. Semiprofessional individuals do not find the detail in annual reports excessive, nor do most of them have difficulty coping with the complexities of the financial data. The buy-and-hold segment is almost evenly split between those who find annuals excessively detailed and those who do not. They are similarly split in their perceptions of the difficulty of the financial data. The opportunity-driven segment has a preponderance of investors who find annual reports neither too detailed not too difficult. [SRI, p. 63-64]
Are Annual Reports Too Detailed?
Buy & Opportunity- Semi- All Survey Question Hold Driven professionals Individuals "Annual reports are too detailed for my needs" Agree 42.3% 29.3% 20.9% 36.2% Disagree 38.5 45.7 57.9 42.8 "The financial data in annual reports are too difficult for me to understand" Agree 34.6 18.6 13.7 27.3 Disagree 38.5 52.9 68.0 45.9 Source: SRI International survey, 1986. [SRI, p. 63]
Professionals and individuals alike are against creating different versions of the annual report for different audiences. In addition to believing that one group should not be deprived of information given to another group, which is perceived as a form of discrimination, they believe that those receiving more information have an unfair advantage. Even though professionals believe that they would receive the more detailed versions of annuals, and even though some individuals complain of the detail and complexity in annual reports, a majority of both groups opposes differential reporting. [Also included in 5(d) and 15] [SRI, p. 70]
When asked to agree to disagree with the statement, "Companies should publish different versions of the annual report for different audiences," investors expressed the following views: [Also included in 5(d) and 15] [SRI, p. 70]
Professional Individual
Professional Individual Investors Investors Agree 22.8% 30.3% Neutral 6.7 11.6 Disagree70.5 52.8[Also included in 2(d), 5(d) and 15] [SRI, p. 70]
In 1983, FERF reported on an experiment, which is still underway, exploring the concept of a "summary annual report." It would relieve information overload, while being a more useful, informative communication device for a company's shareholders and for unsophisticated investors. Thus, the summary report would become an abbreviated, efficiently formatted, highly readable successor to today's annual report. Those needing more information would still have access to the SEC Form 10K. [Also included in 5(d) and 15] [SRI, p. 70]
This study has shown that those aspects of summary reporting that clarify, summarize, present in more understandable form, and add value to annual report information would be well received, but reducing the amount of information included in the annual report would not be. Many of the suggestions offered for improving the annual report had to do with the need for more information, rather than less, and for information with a higher added value. [Also included in 5(d) and 15] [SRI, p. 70]
__________
[Context] Meeting of the Investor Discussion Group on October 16, 1992. When discussing the types of information they use to achieve their objectives, some investors raised several issues related to the qualitative aspects of financial reporting.
Participant I-7
We don't get good FAS 14 disclosure in the annual report and we get less from most of our companies in the quarterly reports. FAS 14 is just an abomination at least in my industry from a quarterly point of view. I also heard the argument about the expense of creating this information. There isn't a reasonable size company that doesn't have internal reporting and the people inside the company get a report card, if not monthly certainly quarterly, and that's the kind of information that is readily available that I would like to see. One of the things that should be discussed somewhere is: what the information that we as outside investors should not be permitted to get from a competitive point of view? They all know internally what their competitors are doing and yet they don't want to provide certain information to us for competitive reasons. It's vital that the accounting profession decide what kinds of information are competitively harmful and others that aren't. [Also included in 1(b), 3(a), 3(b), 3(d), and 11(c)] [TI 10/16, p. 21]
__________
Participant I-11
Another point is the MD&A which usually reads something like this: sales were up because we sold more products at higher prices, cost of goods was up because we paid more for raw materials, and gross profit was down because cost of goods went up more than sales. That's about what you get in 90% of MD&A; that is a farce. Either require management to have meaningful discussion of their operations or get rid of it. [Also included in 1(b) and 13] [TI 10/16, p. 22]
Participant I-12
I want to come back to the MD&A. Not only the discussion of the income statement approach is bad, but try to look at the balance sheet. There aren't many people who would have realized the problems that were emerging at [name deleted] on lending businesses unless you looked at their balance sheet from a lender's viewpoint. The MD&A has just been so bad. Companies say the SEC has certain requirements and you can't get your statements out to the SEC in a timely fashion unless you meet their requirements. If you start looking at MD&As across industries, they all read the same way. [Also included in 13] [TI 10/16, p. 23]
What I'm starting to see in the subcommittee I run is that companies are beginning to tell you something on why revenues are up, for example. Every year we told them about the inadequacies of their MD&A; it took 4 or 5 years but now they are starting to respond and we're starting to see some improvements. [TI 10/16, p. 23]
__________
Participant I-6
I think the formal statements are very important. I include them in my model and I see the % changes. But more importantly, then I read the footnotes and the front of the annual report and I try to reconcile what they say about the company to what the financial statements actually say. Nine out of 10 times, the MD&A doesn't even address what changed in the financial statements. [Also included in 1(b) and 13] [TI 10/16, p. 27]
__________
Participant I-9
I was investment manager at [a company's] pension fund for 12 years. The numbers were worked backwards to give a total that looks something reasonable but wouldn't cause problems with the next union negotiations. That the rate of return was not something that the employees would feel we couldn't make, and it was to show that we were about 85% funded because they wouldn't have any worry that we could pay the pensions. If we showed that we were overfunded, it was an open invitation to take it away from us. It was a case of "what do you have in mind"? The company would have been insolvent if they had taken completed transactions for the number of people that they were going to lay off in the coming years at $50,000 a head. Now, you're seeing companies like [name deleted] claiming they can make 12% investment return on their pension fund. So it's an absolute disgrace. [Also included in 1(b)] [TI 10/16, p. 29]
[Context] Meeting of the Investor Discussion Group on October 16, 1992. During the discussion on the ways investors use information from external reporting to achieve their objectives, some investors raised the issue of information that should not be disclosed for competitive reasons.
Participant I-7
One of the things that should be discussed among analysts, accountants, and the companies is a list of information that cannot be disclosed for competitive reasons. There are certain things that I believe can competitively hurt a company. [TI 10/16, p. 54]
Participant I-5
On the other hand, a company issues the quarterly results and there is a conference call. The quarterly results are 2 pages long and there are analysts on that call for two hours. There is more being discussed on that conference call than what was on that press release. Why doesn't everyone else get to see it? Competitive reasons? I don't think so. Why isn't that printed and available? [Also included in 11(e)] [TI 10/16, p. 54]
Participant I-6
We have asked for a long time that the aluminum companies disclose their average realized prices historically. Now they're starting to do it. I don't understand the competitive disadvantage they experience by giving you the historical realized prices of a commodity and yet it took forever to get it out. [Also included in 13] [TI 10/16, p. 54]
[Context] Meeting of the Investor Discussion Group on March 17, 1993. Part of the meeting was devoted to the topic of structure and process. During the discussion, comments were made on the overall quality of external reporting.
Participant I-12
I would agree with [participant I-11]. There has been a visible decline in the quality of financial reporting; companies are far more cautious about how and when they disclose things. Maybe it's better ultimately, I don't know. We have to participate in monthly conference calls; the things that management is willing to talk to us about have changed. We get less of a feel for what's really going on. [Also included in 18(b)] [TI 3/17, p. 63]
Committee/Staff/Observer
You're getting less as a result? [Also included in 18(b)] [TI 3/17, p. 63]
Participant I-12
Yes. This environment has got to the point that if you have a bad quarter, the shareholders sue you for withholding information. It's being used far more than is reasonable. [Also included in 18(b)] [TI 3/17, p. 63]
[Context] Meeting of the Creditor Discussion Group on December 8, 1992. Part of the meeting was devoted to the topic of creditors' objectives and approaches. During the discussion, comments were made on the overall quality of external reporting.
Participant C-1
One of the problems that we run into between accrual accounting and cash accounting is that accrual accounting now has become so complex, with all the new accounting standards that have been coming out, that it's becoming very difficult for us to go from accrual accounting back to cash accounting. And most of the companies that we see, and most of the bankruptcies that we've worked on, have had very nice income statements, very nice balance sheets, but the problem is that they run out of liquidity. We look more and more at the income statement, the cash flow statement, and the current accounts or the current part of the balance sheet in order to determine liquidity. [Also included in 1(a)] [TC 12/8, p. 12]
The other problem we have is that each of the different forms of public information you have all have different information. It's very difficult to go from a proxy statement or from a 10K to a 10Q, and to go back. So the seasonality of cash flow--and that's what really we've found has tripped up most companies is the seasonality of cash flow--is important, but also sometimes very difficult to go back and forth between. [Also included in 1(b)] [TC 12/8, p. 12]
__________
Participant C-6
Many times in my business we virtually get no disclosure at all. For example, a balance sheet and income statement with no footnotes. So, it's incumbent upon the lender to go in and query management and dig up pertinent information that we need to make any kind of educated decision. [Also included in 5(d) and 15] [TC 12/8, p. 27]
__________
Participant C-3
Increasingly, we're getting into an argument of what's proprietary and what isn't, though, and where do you draw the line between what types of information should users of financial statements have, and what we shouldn't have. So maybe the best way to approach the issue of how do you define a segment is based on revenue volatility, and not individual products or individual legal entities, although I guess the legal entity issue is important. [Also included in 3(b)] [TC 12/8, p. 32]
__________
Committee/Staff/Observer
I'd like to ask those who deal with small private companies if you are hearing from those that you loan to, your customers, complaints about the high cost of complying or preparing financial statements under the standards? Everything we're hearing basically is kind of adding to this, and yet one of the reasons that we're here, I think, also is this concept that there is a tremendous cost to the information overload requirements we currently have. Are you hearing from your customers a problem with cost overload? [Also included in 1(b)] [TC 12/8, p. 42]
Participant C-7
I deal a lot with small-type companies, revenues under $5 million, and that's an issue that we negotiate with each of our borrowers. Cost of preparation of financial information is a common complaint; they say they can't afford audited financial statements. [Also included in 17(f)] [TC 12/8, p. 43]
Participant C-6
I think it's just an ongoing problem there. I'm normally dealing with a compilation or review, and I would love to get an audited statement, but that happens very, very infrequently. But it is a matter of cost, and it's a continual issue with regard to lender or borrower. So that is certainly a consideration, no question. [Also included in 17(e)] [TC 12/8, p. 43]
Participant C-5
We are typically getting an income statement and a balance sheet, we are not getting a statement of cash flows, or we're not getting a statement of capital changes. What concerns us is the need to establish some standards for the degree of verification that might go on. Rather than asking for more disclosure, we would trade that for some verification at that level, an audit verification. [Also included in 1(b) and 17(b)] [TC 12/8, p. 43]
Participant C-8
We've often done the opposite, and agreed to forego the verification for more disclosure, more schedules of the various assets and liabilities on the balance sheet. [Also included in 1(b) and 17(b)] [TC 12/8, p. 43]
__________
Participant C-12
I was going to say I like to look through a full cycle, and today that tends to work out to a decade or more. And unfortunately I end up looking at three to five years often because that's what I'm given, but if I look at three years for a really extensive credit exposure, I'm looking at one small leg of the cycle. And it's not enough. It's a mistake that I think a lot of people I work with and I fall into because we don't have more readily available. It's one area where I think Europeans do a better job than we do. A lot of European companies will routinely put a decade of results in the annual report, and you can see that development over a full cycle. [Also included in 1(b)] [TC 12/8, p. 49]
__________
Participant C-3[Participant C-1], in the area of contingent liabilities, especially environmental, are you suggesting that the current FAS 5 rules aren't being followed, or aren't stringent enough? [Also included in 1(b)] [TC 12/8, p. 55]
Participant C-1
For example, I've got a company that's in a superfund site with a very impoverished little city, and the reality is the company is going to have to end up even picking up their costs. And the number is just really not disclosed anyplace. [Also included in 1(b)] [TC 12/8, p. 56]
Participant C-3
The reason I asked that question is this is an area where you currently have some accounting rules that govern not only the accounting but the disclosure, which is kind of different from some of the other issues that we've been talking about where there aren't any rules or any requirements. I'm not sure if this is an audit issue, or an SEC issue for a public company. [Also included in 1(b) and 17(a)] [TC 12/8, p. 56]
Participant C-11
It's judgment, isn't it? So it's a question of not just the management but the auditors having to make a judgment as to materiality, and being pro-disclosure. And oftentimes people aren't pro-disclosure if it's bad. So it's a problem. [Also included in 1(b) and 17(a)] [TC 12/8, p. 56]
__________
Participant C-1
I think in a way both these comments refer to an issue that we all wrestle with, which is the quality of financial statements. In no place in the financial statements there is a ranking of the quality of the information which management and accountants rely upon in order to generate the financial statements. [Also included in 1(b)] [TC 12/8, p. 58]
Participant C-6
That's a very good point. We've run into a couple of situations where we've asked for information that we weren't able to obtain because management wasn't able to put it together for us. That was a very telling sign as far as management information systems in place and management itself. [Also included in 1(b)] [TC 12/8, p. 58]
Participant C-10
When you get on a bankruptcy committee, you can compel information. But the company is paying for it at that point, and in effect the lender is starting to become the equity holder. There is a cost that the company at that point has to incur. [Also included in 1(b)] [TC 12/8, p. 59]
[Context] Meeting of the Creditor Discussion Group on February 2, 1993. Part of the meeting was devoted to the topic of display. During the discussion, comments were made on qualitative aspects of external reporting.
Participant C-2
I would say users do have a need for that information and generally will get it. But I think it would be very helpful that some of these things would be readily available as part of financial statements. Particularly some information about the quality of receivables, the agings of payables and receivables. Also the nature of slow moving or obsolete inventory, if that could be disclosed. I think also for businesses that are highly seasonal, if you could give some indication of high/low average receivables, payables, or inventory levels, that would be helpful information. Yes, you do have to get it to do your underwriting. Some of that will already be available to you. I worry a little bit about companies' willingness to disclose some of these. They consider it to be proprietary. [Also included in 5(b)] [TC 2/2, p. 18]
__________
Participant C-5
I am a strong proponent of getting cash flow information in a different format than we currently get it. I didn't hear anybody suggest at the last meeting a full cash income statement. But it sounds like a nice proposal. I need more and a better format for cash flow; in a comparable income statement format on a cash basis would be probably the only way to do it. Then the question is again, cost. And I've got to be fair to the borrowers who I've worked with that "am I demanding too much?" and "is there a cheaper way to get it?" I wouldn't expect it to be a high cost approach to the problem. It clearly would be a satisfactory approach. We still are going to end up converting statements prepared under the indirect method to the direct method. We start with the EBIT line and work our way down to a OCF type of number (operating cash flow) which is prior to working capital changes, then a supplemental analysis of the effects of working capital changes on cash flow ultimately coming to a cash from operations. And then working into our understanding of the demands on cash flow, that being interest and fixed charges, what we consider investing, financing activities. Where we end up with cash flow, I think we understand it well, but it's just we have to do a lot of work. [Also included in 5(c)] [TC 2/2, p. 22]
[Context] Meeting of the Creditor Discussion Group on February 2, 1993. Part of the meeting was devoted to the topic of disclosure about operating opportunities and risks. During the discussion, comments were made on qualitative aspects of external reporting.
Participant C-14
My guess is a lot of this gets on to the competitive information areas that managements are going to be reluctant on disclosing. I think rightfully so. I'm just not clear, I think, on what the objective for this section is. [Also included in 10(b)] [TC 2/2, p. 32]
__________
Participant C-17
In today's world, there is a different standard of disclosure for public and private companies. What I'm sensing is, one of the concerns I have is if you try to impose on privately held company, the same level of disclosure, even get close to that you're now requiring of a public company, you're just simply going to drive them away. That's all there is to it. One of the reasons they're private is because they don't have to do all this stuff. [Also included in 10(c)] [TC 2/2, p. 34]
__________
Participant C-2
The overriding issue to me is cost. I think frequently we just don't have an idea of how much it costs to do all of this. And it might be helpful to us if we knew because then we could make better judgment. [Also included in 10(c)] [TC 2/2, p. 34]
[Context] Meeting of the Creditor Discussion Group on March 11, 1993. Part of the meeting was devoted to the topic of auditor involvement. During the discussion, comments were made on qualitative aspects of external reporting.
Participant C-14
I was going to try to differentiate off balance sheet items like swaps and hedges that we talked about in other meetings, because I think we've suggested that there may be better ways to account for them in the financial statements, to present them differently. I distinguish that from things like legal and environmental contingencies where I see a real challenge on the part of the auditors. My understanding is that companies don't want to disclose that kind of information because it helps set up the case for the people coming against the company. I don't know what the answers are but I see that as a more difficult issue to handle than other off balance sheet items. [Also included in 17(b) and 19] [TC 3/11, p. 7]
__________
Participant C-7
Looking at the market we service, similar to [participant C-6], we're talking smaller companies. We're seeing I'd say a migration in types of financial reporting, from audits to reviews, reviews to compilations, because of costs. Our concern is in trying to build the perfect machine, you don't consider the market, and the cost benefit of what you are trying to impose. Now for a Fortune 500 publicly trading company, given their size, it's easy for them to bear that expense. When you start getting into, let's say the owner-manager-type companies, I'm concerned about the costs that you're imposing and that instead of improving financial reporting, you're going to have unintended costs by creating all these standards and you're going to impair financial reporting at the lowest level. [Also included in 17(a) and 17(e)] [TC 3/11, p. 16]
__________
Committee/Staff/
Would you want an MD&A for private and smaller companies? [Also included in 13 and 17(b)] [TC 3/11, p. 25]
Participant C-5
I'd obviously like to start moving down in the middle market segment with more MD&A, even if they are LBO-type companies, where we don't have a public reporting requirement. But, at the same time, I would prefer to know that the auditor feels that there is that obligation associated with the MD&A, by not being able to disclaim any obligation with regard to that, even though they've done work around it. [Also included in 13 and 17(b)] [TC 3/11, p. 25]
Participant C-1
What smaller companies say is we'll give you 10K and 10Q equivalents. And all it is, is the balance sheet, the income statement and maybe, if you're lucky, they give you notes. And they claim that that's the 10Q or 10K equivalent. It's not done timely. [TC 3/11, p. 26]
Participant C-17
If you try to make the MD&A a tool to be used down at the private sector, I think we're just not going to get anything near what we get from them on the public side, and you're basically going to make a lot of privately-owned companies walk away. So, to expand it beyond what it already is today, you'd get very little at a very great cost. [Also included in 13] [TC 3/11, p. 26]
Committee/Staff/Observer
You would make smaller companies walk away? [TC 3/11, p. 26]
Participant C-17
I'm just saying that they're not going to be willing to bear the cost of doing it. I wouldn't. If I were running a privately-owned company, it would serve no useful purpose in my mind. [TC 3/11, p. 26]
Committee/Staff/Observer
That means that you are willing to grant financing without it? [TC 3/11, p. 26]
Participant C-17
We do, don't we? [TC 3/11, p. 26]
Participant C-10
There's a rule 15 that the SEC has that requires companies with 300 security holders or more to file a disclosure. Some of the companies that have issued bonds and have let's say 15 holders, have filed that form and said: "Okay, we're no longer going to give it to you." And that has been a very big bone of contention in that area. I would love to see it corrected through the SEC in some way. Companies have deliberately withdrawn the information and they're some of the ones that have then gone into bankruptcy a year or two later. [TC 3/11, p. 26-27]
Participant C-7
For the type of company we deal with, getting that kind of information is basically a matter of the credit negotiation process. We should be in there asking these questions of management. [TC 3/11, p. 27]
[Context] Meeting of the Creditor Discussion Group on March 11, 1993. Part of the meeting was devoted to the topic of structure and process. During the discussion, comments were made on qualitative aspects of external reporting.
Participant C-14
Management may have the opinion that more disclosures and more information is against their competitive advantage. For example, in the case of legal liabilities, I know they don't even like to tell us numbers in confidence because once they do that, they set themselves up for that number being used by whoever's trying to sue them. [Also included in 18(c)] [TC 3/11, p. 65]
Participant C-5
The resistance will come from management due to cost factors. The transitional procedures will be important. For example, you could have differential standards and then a migration procedure over a period of time that would initially establish a goal, would establish interim disclosure procedures or a standard at a midpoint. By using the differential standard framework for private companies, small companies, negotiated lenders, private transactions, by having some different disclosure standards what you really are doing is not changing the standards but you're forcing certain populations to migrate as they grow. That would be one possibility. The other is over the passage of time you might cut the thresholds and force people to migrate accordingly. The other aspect is this concept of levels of assurance associated with the disclosures. I can accept less assurance on certain items. And that hopefully obviously would translate into cost; less assurance, less liability, therefore less cost if we assume that the big component of this is the litigation issue. We hear all the time about the small end borrower shifting to review, shifting to compilation. They are using a migration already and they're transitioning backwards. [Also included in 18(b) and 18(c)] [TC 3/11, p. 65-66]
__________
Participant C-10
In terms of resistance to reporting, preparers don't want to disclose more because of competitive information content. Even the lawyers when they have a road show say they can't leave the slides. Or they'll leave the slides, copies of the slides with four of the key pages left out and so all the analysts are sitting there writing as fast as they can when those pages are flashed on the screen. The point I'm making here is I think the companies hide behind this thing and it's not anywhere near as major an issue as they would like to make it sound. [Also included in 18(c)] [TC 3/11, p. 68]
The quality and usefulness of the information available to the public is an integral part of the analysis of a financial institution's performance and of its estimated value. The questions in this section address the usefulness of the existing financial information and [analysts'] views toward enhancing such information: [Also included in 1(b), 2(a), 4, and 15] [KPMG BANK STUDY, p. A-3]
Indicate the adequacy of the following current financial statement disclosures.
__________________________________________________________________
Adequate Inadequate No Response __________________________________________________________________ Net interest spread 93% 5% 2 Regulatory capital adequacy 85 13 2 Liquidity 65 30 5 Interest rate management40 58 2 Credit quality 38 60 2 Investment portfolio maturities 75 15 10 Investment portfolio yields 85 5 10 Unrealized gain and loss disclosures 60 35 5 Loan concentration 35 63 2 Contractual loan maturities 60 25 15 Fixed vs. variable rate loan information 63 25 12 Loan portfolio yields 78 15 7 Non-accrual, past due and restructured loans 63 35 2 Other potential problem loans 3 95 2 Charge-off and recovery experience 65 30 5 Allocation of allowance by loan type 43 53 4 Deposit mix 83 10 7 Off-balance-sheet instruments 23 75 2 Five-year summary date 85 13 2 Other 3 8 _____________________________________________________________ _______________________
[KPMG BANK STUDY, p. A-4]
__________
From what has briefly been described of the [foreign] financial analysts' work, there results a series of requirements with regard to accounting data, which are but insufficiently met at present. We have broken them down into . . . major categories. [Also included in 1(b), 2(c), 3(c), 4, 5(a), 5(c), 6, 8(a), 9, 11(b), 11(c), and 15] [BETRIOU, p. 1]
Data relating to one period must be made available as soon as possible to [foreign] financial analysts so they may draw up estimates for the following period. [Also included in 15] [BETRIOU, p. 1-2]
Too many groups await the regulatory deadline to issue compulsory data. It may, in particular, come from the fact that data is now available (greater rapidity within groups would ease decision-making) but also sometimes because data is retained (in order to avoid giving data to competition). [Also included in 15] [BETRIOU, p. 2]
If accounting data should be complete, using it should nonetheless remain as simple as possible. [Also included in 15] [BETRIOU, p. 2]
The fact that appendixes exist should not justify a large diversity in presentations, even if data is published in the end. [Foreign] financial analysts must, in fact, react rapidly. Data which would be stifled in bulky appendixes may very well be partly lost. [Also included in 15] [BETRIOU, p. 2]
It therefore seems more advisable to have less possibilities in presentations. [Also included in 15] [BETRIOU, p. 2]