LEVERAGING THE INTERNET For Financial Reporting.

• Author: Berk, Jeffrey

Leading-edge companies view the Internet as more than a low-cost means of distributing traditional information.

The Internet is having a significant impact on changing how companies provide external financial information to stakeholders -- shareholders and others who hold a stake in the outcome of their activities. Increasingly, shareholders expect companies to go beyond traditional periodic reporting by providing continuous information that's timely and for ward-looking. At the same time, companies are recognizing the importance of effectively communicating performance and strategy to stakeholder groups such as community and environmental organizations, employees and the media.

Studies conducted by Arthur Andersen tap the knowledge of firm experts, industry leaders and CEOs from the world's most progressive companies that excel in providing external financial information. The companies that apply best practices embrace stakeholders' new expectations and growing demands for financial disclosure practices. By marshalling internal resources to leverage the Internet's capabilities, these companies disseminate targeted information in a timely, cost effective and creative fashion.

The best practices companies focus on five key areas. They are:

1. Develop communications that address stakeholder needs.

   Leading companies recognize the powerful impact that effectively telling their stories can have on their ability to capture and retain capital investments, attract talented employees and valued customers and win the support of community groups. The first step is to identify the target audience. Best practices companies understand shareholder demographics and determine which stakeholder groups demand focused attention. The next step: crafting disclosure materials tailored to each group's needs and level of financial literacy.

   Tying all materials to a central message ensures that all stakeholders develop a common understanding of the company's identity and strategy. The leaders also solicit user feedback to improve content, as well as bolster stakeholder services.

   For example, Basking Ridge, N. J. based AT&T ties an interactive survey to its online annual report and mails two types of surveys to a random sample of institutional and individual investors. The questions ask whether or not investors understand the company's strategy and vision for the future.

2. Leverage Internet technology to present and distribute information through the new media.

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