So are we better informed? Although few private shareholders in BT are likely to feel it, I believe we are. For example, back in 1998, most of us had a very naive understanding of pensions and pension funds. More often than not, they seemed to be a source of profit. That year, the notes to BT's accounts covered pensions in seven modest paragraphs. We're now a lot better educated. We might not understand each and every line of the four pages covering pensions in the 2008 notes to the accounts, but we certainly get the general drift. Incidentally, in 1998, BT was paying 9.5 per cent of pensionable pay into its pension fund and the fund had declared a surplus of 1 per cent. Last year, BT committed to pay 13.5 per cent of pensionable pay into the fund. However, the fund's assets only covered 91 per cent of its liabilities, and this gap is being made up by £2.8bn of deficiency payments by BT over 10 years.
And although the narrative at the front of the 2008 report includes some politically correct box-ticking, I believe it is genuinely more informative than the statistically-lite canter through the BT landscape which passed muster in 1998.
Although few investors will do more than glance through the annual reports they receive, and many will groan in objection to their ever greater length, the growing detail is useful for everybody. It is important for professional investors, analysts, journalists, academics and investment database publishers to have access to this information. True, even they may have difficulty absorbing it - and there is absolutely no guarantee that they interpret it correctly - but it is better that they should have the opportunity to do so than that they should not. The parts which they do absorb, and which feed into investment conclusions, eventually filter through to all investors via share prices and general comment. This process is grossly imperfect, but it is all we have got.
My view is not fashionable. Last month, even the Financial Reporting Council (the top regulator of the UK accounting profession), joined the popular lament about the growing length and complexity of annual reports. It launched a "Complexity Project" to "address the risk that corporate reporting requirements, and related influential guidance, are contributing to the increasing complexity of annual reports without making them more useful or understandable".
Forgive my cynicism, but "Are they serious?", was my first reaction. Complexity is extremely valuable for accountants. BT's turnover might be up by only 30 per cent over 10 years, but its audit cost rose 300 per cent from £1.7m in 1998 to £6.8m in 2008 (this included an explosion in the cost of statutory audits of subsidiaries, apparently significantly due to the US Sarbanes-Oxley Act). On-the-ground auditors are only doing what they are told to do by the higher-ups in their profession, and I doubt whether BT pays them a penny more than it can get away with. Thus, much of the complexity comes from close to the very source which is now seeking "to understand the causes of complexity in annual reporting".
The fact is that the problem of complexity in corporate reporting, which is certainly very real, cannot be addressed from within the accounting and corporate establishment. It would not serve users of annual reports or society at large to seek to resolve the issue by reducing disclosure requirements. What is needed is a new professional sector, carved out of the accountancy profession (because that is where the skills are), but dedicated to serving shareholders rather than management teams. This new sector, which has been proposed in this column before, would wade through all the acres of disclosures, distil the important facts, and serve up the results in an independent review within every annual report.
