Building Public Trust

About the Authors

Samuel A. DiPiazza, Jr. is the CEO of PricewaterhouseCoopers. He began his career with the firm in 1973 and has held various leadership positions within the company. His extensive experience in the field of accounting and corporate governance has made him a prominent figure in the industry. DiPiazza's career has been marked by a commitment to enhancing corporate transparency and accountability.

Robert G. Eccles is a former tenured professor at Harvard Business School, where he specialized in organizational behavior and corporate reporting. He is the founder and President of Advisory Capital Partners, Inc., and a Senior Fellow of PricewaterhouseCoopers. Eccles is renowned for his research and thought leadership in corporate governance and transparency, contributing significantly to the development of new models for corporate reporting.

Main Idea

"Building Public Trust: The Future of Corporate Reporting" addresses the crisis in corporate reporting that has shaken public confidence in capital markets. The book proposes a new model of corporate reporting aimed at restoring public trust through transparency, accountability, and integrity. By redefining the Corporate Reporting Supply Chain and introducing a three-tiered model of corporate transparency, the authors provide a comprehensive framework to ensure that investors and other stakeholders receive accurate, relevant, and timely information.

Table of Contents

1. Shaken Confidence: The Crisis in Corporate Reporting
2. A Revised Model of Corporate Reporting
3. Tier One: Standards for Global GAAP
4. Tier Two: Industry-Based Standards
5. Tier Three: Company-Specific Information
6. Corporate Reporting: The Five Challenges
7. XBRL: Enabling Information Quality, Speed, and Usefulness

Shaken Confidence: The Crisis in Corporate Reporting

The trust of the general public in the capital markets has been fundamentally shaken by high-profile corporate scandals such as Enron. The collapse of Enron not only led to massive financial losses but also eroded confidence in corporate reporting. This crisis of trust extends beyond just the companies involved; it implicates the entire Corporate Reporting Supply Chain, including executives, boards of directors, auditing firms, analysts, and information distributors.

“Faith in corporate reporting is, perhaps, at an all-time low. Yet, without this faith, the capital markets cannot truly function.” – Samuel A. DiPiazza, Jr. and Robert G. Eccles

To restore this faith, it is crucial to rebuild the three key elements of public trust: a spirit of transparency, a culture of accountability, and people of integrity. Transparency ensures that all relevant information is readily available to investors. Accountability holds all members of the Corporate Reporting Supply Chain responsible for their actions. Integrity demands that individuals act ethically and honestly.

A Revised Model of Corporate Reporting

The book introduces a new model of corporate reporting designed to rebuild public trust. This model is represented by a three-tiered pyramid:

1. Tier One: Global GAAP
2. Tier Two: Industry-Specific Standards
3. Tier Three: Company-Specific Information

These tiers are not disconnected; they provide an integrated approach to corporate reporting, offering a holistic view of a company's performance and strategy.

Tier One: Standards for Global GAAP

The first tier consists of a set of global generally accepted accounting principles (Global GAAP). Currently, most companies use country-specific GAAP, which can lead to inconsistencies and lack of comparability. The goal of Global GAAP is to provide a uniform set of accounting principles that apply worldwide, ensuring consistency and transparency.