A year into studying my accounting undergrad, Enron went bust. The fallout from this was huge. Not only did the scandal mean stricter accounting rules and revised practices (which in turn produced a nightmare for students like myself) but, at the time, the largest bankruptcy in history forced the focus of the world onto financial reporting.

Arthur Andersen, one of the then “Big Five” accounting firms, ceased practicing and a host of other accounting scandals came to light; most notably Parmalat and WorldCom, the latter which promptly replaced Enron in the record books as the greatest case of bankruptcy.

Soon, all the talk in accounting circles was about ‘sustainability reporting’ and the ‘triple bottom line’ - economic, social and environmental factors that, while not necessarily representing immediate outflows of resources, will result in future costs being incurred (asset depreciation is probably the most well-known of these).

With the current financial crisis in full swing and new records being broken (of course Lehman Brothers has since claimed the dubious honour from WorldCom), attention has again been drawn to the flimsiness of ‘profit’. How does one report on profit? The last decade or so definitely goes to prove that accounting profits don’t necessarily match economic profits – i.e. the increase in ‘wealth’ of an organisation.

There are just too many ways to define revenue and costs. Give one chef a financial recipe and he’ll whip up a delectable cream-tart while his more conservative colleague may dish out a less savoury humble pie.

The advancements made in GAAP (Generally Accepted Accounting Principles) in recent years have gone some way to improving the reliability of companies’ financial statements. The problem is that there’s just too much out there that GAAP can’t cover. The guidelines, for all of their remarkable progress, still report on the present. GAAP is not a prophet. With the future coming ever quicker businesses find themselves having to be more mindful of the road ahead.

So, what are the online dynamics to bear in mind when considering sustainability? Well, online asset valuation is a completely different kettle of fish to most offline assets. Assigning a monetary value to a non-eCommerce site should perhaps be calculated not through an investment of costs in the asset itself, but rather on its performance through an applicable analytics package and the various metrics that can be derived therein.

Quantifying a brand’s online reputation is definitely going to play a larger role in audits at some point in the future. It’ll probably still be a good while before we see the results of an ORM tool anywhere in a set of financials. That said I fully believe that the results of reputation measurement will at the very least be included in the notes at some point in the not too distant future – the level of understanding that ORM can add in determining the value of a brand is incomparable in the online realm.

Like a measurable and reportable SWOT analysis, ORM reports that are able to quantify opportunities and risks will have their results incorporated into much higher level formulae than anything that we’ve seen to this day. One can only imagine at the decisions that could be based on results that these tools provide.