February 2003

‘GAAP Is Not Enough … in Theory’

According to an online survey of 1,321 U.S. general and finance managers conducted during the second half of 2002, 56% of respondents think that companies should report more than is required by GAAP in order to provide visibility into their operations and restore confidence in financial reporting.

The survey asked respondents, “Should public companies report more than is required by GAAP in order to provide visibility into their operations and restore confidence in their financial reporting?” According to Jeff Rodek, chairman and CEO of Hyperion, the survey’s creator, “The fact that 44% don’t feel additional reporting is needed points toward a possibly growing desire to move past what many feel is unnecessary witch-hunting. Also, complying with new regulations and requirements from GAAP, FASB, the SEC, and others is hard enough to do, given most companies’ inability to access accurate data in a timely manner. Our data show that most companies cannot close their books in 11 days or less. Our suspicion is that even the 56% who say they should report more than required by GAAP would most likely have a hard time doing so, given the widespread problem of over-long reporting cycles.”

This last point and its interpretation are echoed by another late-2002 study which found that 24% of Fortune 1000 executives say their CEOs do not have the data to personally certify their corporation’s financials.

In the survey conducted by Teradata, respondents were asked, “Does your CEO have the right data to meet SEC requirements for guaranteeing financial statements?” A Teradata spokesperson noted that CEOs should have a “single view of the truth” to ensure data are timely, accurate, and complete. “No-where is this more critical than in financial reporting, especially with the added responsibility now placed on CEOs,” he said. “CEO confidence in the data they are reporting begins and ends with data management. When only 76% feel comfortable in this area, it is a failing grade.”

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