Corporate Finance & Governance | Leadership / Management

EBR movement grows … and bides its time

LauxOnce upon a time, enhanced business reporting was the golden child of finance. Better information, a clearer look at operations, renewed focus on key performance indicators ... these were (and still are) the promises of EBR, and what investor could resist? It truly seemed like an idea whose time had come.

Funny thing about recessions, though: They have a way of taking revolutionary ideas and turning them into afterthoughts. It's hard to focus on the latest innovation when the task at hand is to fix what's broken.

So EBR seemingly has been moved to the back burner while regulators focus on stimulus plans, accounting rules, shady investment vehicles, and injecting a ton of transparency into the world of finance.

But wait ... did someone say transparency?

"With the current financial crisis, the word you hear over and over again is 'transparency,'" Bob Laux, senior director of technical accounting and reporting at Microsoft, said at the 2009 Maryland Business and Accounting Expo. "We're all about transparency, and we believe we can help move that discussion forward."

"We," in this case, is the Enhanced Business Reporting Consortium, of which Laux is a member. And while the rest of the finance world is scrambling to find transparency's holy grail, Laux believes the EBR Consortium may already have it.

For the uninitiated, here's what we wrote about EBR last year:

An enhanced business report would include much more than just the bottom-line numbers. It would include key performance indicators (KPIs) like employee turnover and information about, for example, patent portfolios or research and development. It could change Wall Street’s focus on short-term earnings projections and offer insight into how companies are creating value over the long haul. Experts say the results could include greater investor loyalty and lower stock-price volatility.

At a time when you'd think folks would be rushing to the EBR altar, Laux (pictured above) describes progress as "slow but steady." Still, some important goals are being met.

  • Enhanced business reporting was mentioned prominently in the final report of the SEC's Advisory Committee on Improvements to Financial Reporting. That report was released in August 2008.
  • EBR specialists are working with financial analysts from Cisco, IBM, Microsoft, Oracle and SAP to determine which KPIs apply to the high-tech industry. They will focus next on the consumer goods industry, Laux said.

After that?

"The next step is ongoing. It's evolutionary rather than revolutionary," Laux said. "Some of us get frustrated because the process is not more fast-paced. But we've made steady progress. We're just trying to become part of the debate on how to improve financial reporting."

Watch Laux's Expo interview in its entirety on our MDBizExpo Live! site, then check out these other EBR resources:


Bill Sheridan