A view from the Lab

The Financial Reporting Council (FRC)’s Financial Reporting Lab is at the forefront of developments in corporate reporting. Thomas Toomse-Smith, Project Director, Financial Reporting Lab, shares some insights.

Q: What innovations in the world of digital corporate reporting should we know about – and what’s driving them?

At the FRC Financial Reporting Lab, we’re assessing a series of technology projects: 

i) XBRL, which we call ‘structured data’.
ii) Blockchain or ‘structured trust’.
iii) Artificial intelligence – ‘structured judgement and process’.
iv) Visual and augmented reality, which we’ve named ‘structured experience’.

There is no winner, though. Each of them contributes to the ‘S-curve’ of technology development and use, and proceeds along with the rest.

It’s vital to remember that technology is here to assist and deliver, but it’s even more important to ask: what are we trying to achieve? There’s no point in trying new things just for the sake of trying them. 

With reporting, the value lies in telling your story more effectively and more efficiently. The old HTML reports did neither, which is why we rarely see them these days. ESEF (European Single Electronic Format), however, shows some promise and people need to consider the wider challenge.

Q: How would you sum up the role of technology and artificial intelligence (AI) in corporate reporting? 

At the production end of corporate reporting, AI is used to speed up the process. I believe there are opportunities in the future not only for effective and efficient production, but also for investors to gather information via AI.

The balance of transparency versus information leaking from alternative data sources changes the dynamic of the annual report’s value. 

AI is not going away: there is more and more structured data. So it’s a case of when, not if, for the use of AI in corporate reporting. 

Q: Do you foresee the end of the annual report in printed and PDF form? 

In an infographic I produced, I predicted that 2058 would mark the last paper annual report. What I think applies today, though, is that you have to provide information on paper if asked, but we don’t have to think ‘paper first’. Companies know their reports are being read primarily as PDFs, yet they are still producing printed documents. 

Q: What do you think corporate reporting will look like 20 years from now?

There are some exciting opportunities! I predict that we’ll be wearing virtual reality headsets and interacting with an avatar, which represents the investor relations function. Remember, we’re already all walking around with high-quality computers in our pockets, so it’s only a matter of time.

For those who want to be innovative, corporate reporting will be very different. That said, for those who don’t, the old ways will remain. The main consideration is the value of information balanced by the value of the story.

The Luminous view

Through the use of advancing technology, investor relations teams will be able to communicate directly with the investment community on a more frequent basis, allowing the teams to report more efficiently to their boards/management teams about investor interest, buying and selling.

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