This article will focus on the downsides of all four annual accountant statements; balance sheet, income, cash flow and retained earnings.
The primary reason is that they give a single moment in time, whilst every situation is constantly changing. Just In Time inventory alone means that companies keep a very low amount of what they need for standard production, on the assumption that it will be delivered before stock runs dry. For annual statements that creates the risk of a low amount of inventory, boosting all relevant ratios. Using this reliance on quick delivery is also a risk, which was highlighted during the covid pandemic and borders were shut.
Over the past years supply chains have also became more global, which is fine as it allows large scale specialisation, but every country has a slightly different set of national accounting regulations, so you cannot compare all statements without making allowances or spending time adjusting for your own standards*. Global supply chains can also become an elaborate web of producers, so the statements of a single entity, without investigating its dependencies, is of limited value.
All corporate entities, within the same legal system, use the exact same format, whilst those who use the statement do not have the exact same need for them: A bank will want different information than a long term partner or a investigative journalist. This creates the need for a very big file. A solution would be to create an interactive database, which still requires companies to supply large amount of data, but at greater comfort to end users. Though that does not reduce the burden of the submitting entity, possibly increasing how much they submit and in what format it is handed over. Using the exact same format in completely different industries is also not 100% ideal, as seasonal differences and industry standards highly vary.
The current system uses a paywall that suggests a lot of work for someone to supply the requested document, when it really is just a download. As these documents are legally mandated by the government, for general usage, they should be made available at no charge; otherwise the general public will be discouraged from using them. A student who has to write about several companies will be faced with a large expense whilst a big corporation will considered the expense trivial. A solution would be to either include the cost in general taxes or charge industry wide organisations, such as banks; the big consumers of these statements. Or only charging professional users, making it free for normal people (a small fixed free amount per month could also work, with increases for bigger demands on the system).
*A large amount of corporations uses the exact same international standard or issue a few varieties; this is costly to do and only bigger organisation can afford to do so. Therefor it will not be assumed in this article.
