Digital Financial Reporting

In a document related to a periodic review of the structure and effectiveness of the IFRS Foundation, the term "structured digital reporting" is used and described.  See page 13 of the request for comment which states in part: (emphasis was added by me)

Relevance of IFRS in structured digital reporting: IFRS Taxonomy

29. Users of general purpose financial reports do not all access or process the information in those reports in the same way. Some investors and analysts focus on how information is presented by management, as reflected by their support for the IASB’s projects on Financial Statement Presentation and the Disclosure Initiative. Other investors and analysts are more focused on the data within a general purpose financial report, and either extract data from the reports to use in their models or use data aggregator services to access the data. IFRS deals with the substance and content of the transactions and other economic phenomena that should be reported in general purpose financial reports. The IASB’s expertise is in determining how transactions and economic phenomena should be classified, measured and presented in general purpose financial reports. The IASB focuses on understanding the needs of the different types of users and uses of general purpose financial reporting and sets its Standards with these in mind.

30. The IASB’s Standards are developed on the basis that entities are required to prepare a general purpose financial report whether that report is printed or in electronic format, ranging from a PDF version to one that is ‘tagged’ (in a computer-readable code that identifies specific items) using a structured data format. One of the reasons the IASB produces the IFRS Taxonomy is to assist with the accurate digital representation of IFRS in a structured format—ie with the information tagged and structured to help with searches and analysis.

I use the term "digital financial reporting".  But structured digital reporting and digital financial reporting are talking about exactly the same thing.

More and more people seem to be understanding that "digital" is a new way to represent financial information. "Printed" financial reports will likely always hang around just like vinyl records hang around even though most music is in MP3 format.  But "digital" will likely increase in volume, and "printed" will likely decrease in volume over the coming years.  "Digital" will change financial report creation work practices.  Just like you can "print" a photograph from a digital image; rather than starting with the printed image and "scanning" the print to get a digital copy. 

Today's practice of "bolting on" the structuring process to the end of the print process is backwards.  This blog post describes in general terms how structured digital reporting/digital financial reporting will work. This blog post explains what makes structured digital reporting/digital financial reporting.

I know this is a mental leap, but this video shows CAD software which is used to design cabinets in action.  Notice how parameters are changed and then the image in the drawing and the drawing itself changes.  I know it is hard to imagine, but structured digital reporting/digital financial reporting will work in a similar manner.  This blog posts will point you to a document which helps you understand this.

Structured digital reporting/digital financial reporting is not only inevitable, it is imminent.  Investment in becoming an XBRL master craftsman will pay dividends for a long time to come. Hone those knowledge engineering skills.