Measuring Relationships: A Future Auditing Measure?

December 4, 2006 at 9:34 pm 4 comments

Now this may not seem gripping… but I wanted to talk about future global financial reporting and public company auditing procedures – no, please do read on.

There has been a recent initiative “Global Public Policy Symposium” from all the big accounting / auditing firms and regulators to look at how company financial reporting should be done in the future.

They speak about the value of “intangible assets” that should figure in future reporting:

“The value of many companies resides in various “intangible” assets (such as employee creativity and loyalty, and relationships with suppliers and customers). However information to assess the value of these intangibles is not consistently reported”

If you are really keen, read the full report here (pdf)>>

And they go on to conclude that company reporting should in the future include measures on customer and employee satisfaction – and – relationships with key publics.

The idea of measuring relationships and their value is nothing new: there are a number of studies in this area – with the most well known being the Linder Childers and Jim Grunig guidelines on measuring relationships (although a number of points have recently been disputed by Joy Chia (pdf)).

And let’s not forget that David Phillips was way ahead of the auditors when he wrote in 1992 that relationships should be included as intangible assets of an organisation.

Will the auditors adopt a standard measure for relationships? Well, at least they have plenty of work already to draw from.


Entry filed under: Communication evaluation, PR evaluation.

Linking Media Coverage to Business Outcomes To Monitor or Evaluate – or Both?

4 Comments Add your own

  • 1. KDPaine  |  December 6, 2006 at 11:54 am

    Glenn, you’re dead on here. And you need to read Sandra Duhe’s paper on this that she presented at the IPRRC in 2005, it basically quantifies the impact that relationships have on financial success. And yes, I think auditors should absolutely be measuring relationships as part of any due diligence they do.

  • 2. Glenn  |  December 6, 2006 at 12:34 pm

    Thanks for that comment Katie, I’ll be sure to check out Sandra Duhe’s paper. As you mentioned the auditors should be measuring relationships – as it is something that has been around for some time in academic circle but has yet to break through in the “mainstream”.

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