Technology is rebooting accounting, reporting, and auditing. XBRL-based digital financial reporting is only a part of that reboot.
The Center for Corporate Reporting used the phrase "digital switch-over" in the wake-up call they issued to their members, saying that they should rapidly familiarize themselves with new technologies useful in financial reporting.
Don't make the mistake of being simplistic about what this change is or what it means. There are a lot of buzz words floating around like the Digital CPA. The AICPA explains, What is a Digital CPA. Marketing and sales people who don't really understand the change or what the changes really mean love buzz words. Don't fall into that trap though.
There is a big difference between "simplistic" and "simple" explanations. Simplistic is dumbing something down in order to make an explanation easier. Simplistic ignores complexity in order to create an explanation which can get you into trouble. Simplistic is over-simplifying. Simplistic means that you have a naïve understanding of the situation.
Simple is something that is not complicated, that is easy to understand. Simple means without complication. An explanation of something can be consistent with the real world, consider all important subtleties and nuances, and still be simple, straight forward, and therefore easy to understand.
Explaining something in simple terms takes a lot of hard work. You have to understand, synthesize, organize, summarize, and otherwise put together information that is useful to others.
Creating simplistic explanations is not hard at all. Those sorts of explanations are a dime-a-dozen. But those simplistic explanations will leave you unsatisfied and ultimately lead you down the wrong path.
What is the best way to understand these changes and what they mean? Read everything you can get your hands on.
I have done the best that I can to explain the changes, the "digital switch-over", from my perspective: Getting Ready for the Digital Age of Accounting, Reporting and Auditing: a Guide for Professional Accountants. That document provides the best explanation that I can synthesize, organize, and summarize in 15 pages.
At the end of that document is references to other documents that provide additional details, 187 more pages.
Those 187 pages come from a set of about 750 pages I have been collecting, synthesizing, organizing, and summarizing for about 15 years. Intelligent XBRL-based Digital Financial Reporting is what I have come up with, you can download that information.
Know of something better? Please make me aware of it. Is something important missing? Let me know and I will see what I can do to include it. There is plenty of room for improving that information.
Just as it has for thousands of years, the institution of accountancy will emerge from the reboot better. Different, but improved.
Accounting in Europe had no notion of the idea of ZERO until the middle ages. They learned about the concept of zero from Middle Eastern mathematicians and then incorporated that idea into accounting. In 8500 BC merchants used bollae and tokens for accounting because numbers and writing had not been invented yet. It was not until 3500 BC that clay tablets were used and writing and number systems started to emerge. It would be another 500 years before writing and number systems were fully developed. Double entry accounting was not documented by Luca Pacioli until 1400 AD.
And so now we are, perhaps, going back to tokens...electronic bitcoins and we may be using triple-entry accounting in digital distributed ledgers! Reporting will evolve as will auditing. Who know what will exist 5 years, 10 years, or 25 years from today.
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