ARE GENERALLY ACCEPTED
ELECTRONIC STANDARDS ON THEIR WAY?

By Anthony J. Mancuso, CPA

In 1995, Microsoft, AT&T, IBM, and several other companies first released their financial statements on the Internet. Is your client (or company) thinking of putting its independent accountant's report on the Internet? Today we have GAAS and GAAP. Is GAES (Generally Accepted Electronic Standards) far behind?

With the rapid advances in technology and the demand by the public for increased electronic access to information, auditors are faced with some interesting challenges. Companies will want the auditor's report to accompany the financial statements included on the Internet. To complicate matters, an entity may include marketing information on its web site, which can be hyper-linked from a specific item in a financial statement (i.e., revenues) and construed by a reader that such information is part of the financials reported on by the auditor. Some auditors are inquiring as to their obligation with respect to the financial information placed on the Internet, side by side with their report.

The SEC Practice Section Professional Issues Task Force released Practice Alert 97-1, Financial Statements on the Internet. Practice alerts are not approved, disapproved, or otherwise acted upon by any committee of the AICPA.

In addition, the ASB recently approved for issuance an interpretation to AU 550 entitled "Other Information in Electronic Sites that Contain Audited Financial Statements," which advises auditor's that they have no obligation to read or consider information included in an electronic site.

So what's an auditor to do? The task force suggests that if your client distributes its financial statements on the Internet, information should be set up in such a manner that a user knows they are hyper-linking to information outside of the financials.

Auditors, as the Alert suggests, may wish to discuss these matters with the client during the performance of the audit. *