NEW YORK Author and lawyer Michael Young jokes about the days when it took more time to get some companies' financial statements than it did for Columbus to discover America.
Alas, those days are still here.
In an age of lightning-fast stock trades and instant communications, yearly and quarterly financial reports seem stuck on an industrial-era pace that some say was obsolete decades ago.
"Financial reporting technology allows all sorts of possibilities about which we could not even fantasize back in the Great Depression when our periodic system was put in place," said Young, a partner at law firm Willkie Farr & Gallagher.
Young and other accounting experts have long called for a move to real-time, online reports in lieu of quarterly earnings statements that investors now use to decide whether to buy stocks.
Cheap computing power has made real-time reports more technically feasible, but advocates still struggle to draw wide support for the idea.
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The world's six biggest audit firms -- Deloitte, Ernst & Young, PwC, KPMG, BDO and Grant Thornton -- advocated speedier reporting in a November 2006 report, but acknowledge there are hurdles.
"There isn't anything imminent out there that would change the financial reporting model that we have today to make it more of a real-time model," said Tom Omberg, head of Deloitte & Touche's financial accounting and reporting services. "A lot of issues would have to get worked out before that could become a reality."
Yet others say real-time reporting is worth revisiting.
"Almost any company with rational management tracks its performance daily and makes critical business decisions on the basis of data and trends that should be distilled and published for public consumption," said Harvey Pitt, former chairman of the Securities and Exchange Commission.
Cisco Systems Inc (CSCO.O), for example, has perfected a "virtual close," the ability to put together a complete set of financial statements in just a few hours. Free, open-source software has allowed even much smaller companies to construct dashboard-like digital displays that continuously track sales, orders and other key figures.
That kind of data could help make the stock market much more transparent, said Paul Miller, a University of Colorado accounting professor.
"If I'm an investor, why can't I go on the Web and see what the Wal-Mart sales are today?" Miller asked.
Instead, investors have to wait to find out what happened months ago.
"It's a constant state of incomplete information and the consequence of that incompleteness is discounted stock prices, which means a higher cost of capital," he added.
The SEC has been shrinking the time between financial reports since 2002. The largest companies, which once had 45 days to file quarterly reports, now have just 40 days, while their deadline for annual reports has been trimmed to 60 from 90 days. Small companies can still take 90 days to file annual reports -- still longer than Columbus's 70-day voyage.
A big hurdle in speeding things up more is figuring out how to audit real-time figures or the systems that produce them.
"If you wanted to go to a more real-time report, for example, a voluntary disclosure that companies could make to their shareholders, I don't see how it could feasibly be done with an auditor's report," said Scott Whisenant, an accounting professor at the Bauer College of Business in Houston.
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Some companies fear that more frequent reports would keep investors too focused on short-term performance. Retailers including Wal-Mart Stores Inc (WMT.N), Starbucks Corp (SBUX.O) and Dollar General Corp (DG.N), which once reported monthly sales, have stopped that practice.
Eventually, some companies may embrace real-time disclosures to build more trust in the capital markets, said W. David Stephenson, a homeland security expert and author of Data Dynamite, a book about data sharing.
"I do think that quarterly reporting is going to become an artifact at some point and that it's going to start with some companies -- maybe banks -- that have a particular credibility problem," he said.
One change that may pave the way to more real-time reporting is an SEC requirement that companies tag their financial data with computer codes called XBRL, or extensible business reporting language, he said.
Those tags will help streamline financial reporting and allow auditors and regulators to check it more quickly.
"It would obviously be a headache for investors to try to process financial information on a daily basis, but what a real-time system would allow investors to do is step back and say to themselves: 'What period of analysis for this particular company makes sense?'" said Young, the lawyer at Willkie Farr.
More real-time reporting might also result in smaller gyrations in a company's share price because investors could adjust their expectations each day, he said.
"What we could do is get beyond the one-size-fits-all torture of having everything reported during earnings season," he added.