The U.S. Securities and Exchange Commission (SEC) is one of the very, very few organizations which is showing leadership and vision for the institution of accountancy related to the notion of digital financial reporting.
In a speech Accountants and Capital Markets in an Era of Digital Disruption, SEC commissioner Kara M. Stein made the following comments:
Related to the important role of accountants...
Accountants’ expertise in summarizing and presenting information – that is, data – makes them ideally suited to play a crucial role in ensuring the reliability and accessibility of the data that now drives our capital markets.
Use of common taxonomies...
For example, companies should use common taxonomies to provide up-to-date, accessible, and transparent information to investors. This is where reporting and standards can be reimagined in the new digital world. Let’s think seriously: how should the delivery of information change in the digital age? How should investors access information? Should it be pushed to them every few months, or should it be available on-demand?
Enhancements offered by technology...
Further, technology can enhance both the delivery and usability of financial reports. Most companies keep their financial reporting data in structured databases. However, the data is often presented to investors and financial statement users in an unstructured manner.
Accountants can and should be driving innovation:
A lot has changed since the early 1880s. But just as the industrial revolution drove and accelerated growth, the digital revolution is driving change. Accountants have a unique role to play in our capital markets. With this role comes the responsibility to move forward with strategies to help businesses, investors, and regulators in an increasingly digitally disrupted world. Accountants can and should be driving innovations to enhance transparency, accessibility, accountability, and to promote further trust in the integrity of our capital markets.
Yet, despite all the change, at the end of the day, some things remain constant. This Institute represents a special heritage - a commitment to the public trust that you bring to wherever you work, be it in accounting, management, as investors, or in other capacities.
Others should follow the SEC lead. If the digital financial report is a good thing for public companies, why would it also not be a good thing for financial reporting in general? My personal vision is that of the digital general purpose financial report. Have a look at my personal manifesto. That is where I am going. If anyone has any ideas that would improve my vision, I would love to hear them.
Reimagine financial reporting. Join the 31 others who like this idea! Hard group to sell? Not really. Look at all those who are on the quality band wagon. While digital financial reporting has to earn its right to exist, it is fast proving its worth. Its not about volume of understanding, it is about quality of understanding.
What have you done lately to help move the world closer to digital financial reporting? Or, are you holding onto the practices of the early 1880s?