Internet users should be wary of financial information offered on corporate websites, according to a study of FTSE 100 companies released by Deloitte & Touche yesterday.
Accounts information available online may not have been independently verified. Additionally, companies may deliberately withhold documents that they are legally required to publish, because the Internet comes under less scrutiny than printed information, warns the report, Corporate Communication: Financial Reporting on the Internet.
In 15 per cent of cases where FTSE 100 companies posted detailed accounts, there was no indication whether they had been audited. Only 26 per cent of interim statements were accompanied by an auditor's statement, with an even lower figure for summaries and highlights.
The report also reveals that companies are failing to post a range of mandatory disclosures which legally must accompany published accounts. Missing items include directors' reports (in 26.7 per cent of cases), directors' responsibilities (33.3 per cent), statement of recognised gains and losses (23.3 per cent), reconciliation of shareholders' funds (30 per cent), accounting policies (23.3 per cent), and notes to accounts (26.7 per cent).
"The Internet is not in any way regulated. Auditors are not reviewing websites to check the accuracy of published information," said Mr Brendan Jennings, partner, audit and assurance in Deloitte & Touche's Dublin office.
Mr Jennings said that under Irish and British law, companies have clear obligations to disclose specific types of information when accounts are published. According to the report, "statutory accounts and non-statutory accounts made available on the Internet should be regarded as being published", under the legal definition of "to publish" contained in Britain's Companies Act of 1985.
While Mr Jennings emphasised that he doubted companies examined in the report deliberately were attempting to hide information, the study raises the possibility that companies could do so, or could alter electronically-published data. This is of particular concern as more people turn to the Web for financial and investment information, he said.
In general, says the report, "the investigation found that the disclosures made by companies on the Internet are often at a level of detail considered insufficient for the hard copy. Hence, there is a danger that a reader of the electronic financial statements may be misled through omission, which is compounded if there is doubt over the extent to which there is compliance with the regulations".
The report also inadvertently reveals a surprising level of disregard for the Web. Of the 100 companies, nine had no website at all, while 19 company sites could not be accessed despite attempts on four different days. Eight companies with websites offered no financial information, and one site was "under construction" throughout the period of research for the study.
