Well, it’s been a few years since the last installment, so let’s continue the periodic series I call “Great Cliches of IFRS.” Today’s example – well, you’ll see:

• Over the course of my career, one of the most valuable lessons I have learned is the value of storytelling and how to use stories to convey financial information. Whether on a Microsoft Teams or video call or, hopefully again soon, presenting in person, as finance leaders, we can employ storytelling techniques to present financial information in a compelling and memorable way.
• The financial statements tell the company’s story. You should review them regularly. With this information, you make informed decisions about the future of the business. By understanding how each statement impacts another, business owners can make more informed decisions about their company’s future. Have you ever looked at your company’s financial statements? If not, we suggest you start today. It may be difficult to understand everything at first. But you will be able to tell a story with your numbers with time and patience. All told, the story could very well determine the fate of your business.
• Everyone loves a good story and most stories are told with words and emotional phrasing. In business, however, we have to tell a story using accounting and that story is going to be told in statements and footnotes.
• Finance storytelling applies a creative structure to engage investors, motivate employees, and drive business growth. The narrator focuses on the main character and journey of the story to bring dry financial numbers and data to life. Financial analysis is recast into a path with challenges requiring skill upgrades, leading to insights, iterative strategic planning, and actions to improve performance.

And I could go on indefinitely. You may already be thinking that even if it is a cliché, it’s one that’s worth repeating for the sake of promoting clear and effective communication. But is the emphasis on financial reporting as storytelling actually for the best? After all, given (say) the percentage of highly-touted corporate transactions that fail to meet their stated goals, the story as the company tells it quite often fails to meet the test of time. Parul Sehgal in The New Yorker mused recently on the limits of narrative in a broader context:

• “Storytelling”—as presently, promiscuously deployed—comprises fiction (but also nonfiction). It is the realm of playful fantasy (but also the very mortar of identity and community); it traps (and liberates); it defines (and obscures). Perhaps the most reliable marker is that little halo it has taken to holding above its own head, its insistent aura of piety…Among the other entities storytelling has recently been touted to save: wildlife, water, conservatism, your business, our streets, newspapers, medicine, the movies, San Francisco, and meaning itself. Story is our mother tongue, the argument runs. For the sake of comprehension and care, we must be spoken to in story. Story has elbowed out everything else, from the lyric to the logical argument, even the straightforward news dispatch. In 2020, the Times’ media columnist wrote that the publication was evolving “from the stodgy paper of record into a juicy collection of great narratives.”

But Sehgal points out:

• Story lulls. It encourages us to overlook the fact that it is, first, an act of selection. Details are amplified or muted. Apparent irrelevancies are integrated or pruned. Each decision is an argument, each argument an imposition of meaning, each imposition an exercise of power. When applied to history, it is a process that the late scholar Hayden White termed “emplotment”—in which experience is altered when squeezed into even the most rudimentary beginning-middle-end structure. 

Sehgal’s article contains suggestions of alternatives: “(putting) ideas and images into productive tension, with no reassurance of closure or comfort,” or the alternative notion of a “swarm,” which “doesn’t contain, like a story (but rather) allows—contradiction, dissonance, doubt, pure immanence, movement, an open destiny, an open road.” Returning to this blog’s main field of interest: it’s been posited for a while that in an age of AI, financial reporting no longer needs to conform to long-established, packaged, periodic paper-based formats, and yet here we still are, always running through new iterations of the same old concerns about disclosure overload (a concept which might have been valid when consumers of financial information were primarily and necessarily human, but which we should perhaps now be capable of evolving beyond) and audit quality and resource constraints and all the rest of it, still fussing about with basic definitions and formats and subtotals, our capital markets as irrationally booming and busting as ever, still mired in existential doubt about where it’s all taking us. Has the by-now cliched notion of financial reporting as storytelling really served us well? Even if the concept has some basic validity, are the mechanics of the story-telling, and of the listening and learning, as sound as we need them to be? Should we be exploring financial reporting as swarm, as multiple swarms? As contradictions, as open roads? As anything but stories…?

The opinions expressed are solely those of the author.