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Companies are putting up to 80% of their assets off balance sheet, according to CIMA chief executive Charles Tilley.
'Not too many years ago, 80% of a company's market value was reflected on the balance sheet. Today, that ratio is roughly reversed with only about 20% on the balance sheet, Tilley said.
'The sheer volume of data has not made the information accessible. If anything it hinders access,' he added.
Speaking at CIMA's annual conference, Tilley also criticised the complexity of financial reports, and called for sweeping changes. 'We are at a crossroads in corporate reporting,' he said.
He criticised the growing complexity of financial statements, which he said were becoming increasingly more theoretical: 'Fair value causes considerably more volatility and it is becoming more difficult to understand the underlying performance of a company,' Tilley said. Tilley's comments will fuel growing fears about the length of corporate reports and a belief that they do not work for the users of financial statements.
He emphasised a need to focus on the short-term strategic priorities in company reports as well as the long-term outlook: 'Reports were all about creating value in the past, but the existing financial model does not provide that,' Tilley said.
The CIMA chief said that investors were demanding more disclosures on cashflow. He relayed analysts' views, which said that investors were clearly interested in cashflow, but were not happy with cashflow disclosures.
Janice Lingwood, a director of PricewaterhouseCoopers corporate reporting team backed up Tilley's criticisms: 'Important information can be buried very deep in reports.'
PwC's communications with analysts and investors showed that stakeholders were 'struggling' to find value in the statements.
Tilley added: 'The reports need to evolve more fully to satisfy the needs of the user. The volume of reports and their usefulness clearly needs looking at.'
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