Digital Financial Reporting

People say that the "old school" processes of creating financial reports should be improved, but they offer no new tools that are better, faster, or cheaper than the currently existing tools that are in use.

The problem is well understood.  This statement, paraphrasing the NASBP, explains the problem succinctly: "The gruesome, grueling, painful process of re-keying of data."

So, what is the solution? Things are starting to get more tangible. Again, the NASBP points to where a "20 minute task was turned into a 3 second task" by leveraging standards.  I will get back to the standards in a moment.

How can that sort of process improvement be achieved?

Some of the best examples of an existing commercial product that helps you understand the epic changes that are coming to accounting, reporting, auditing, and analysis come from Blackline.  I put together this video play list titled Financial Transformation and the Modern Finance Platform that helps you understand these changes. Blackline uses phrases such as "accounting process automation" and "continuous accounting" and "smart close" and "financial transformation" and "the modern finance platform".  This is good also.

What sort of improvements can you expect?  Yesterday I wrote a blog post about an experiment that I wanted someone to do so that they can understand something. Part of that experiment is extracting high-level financial information from 5,734 public company financial statements.  It took only 3 hours to extract 46 high level pieces of financial information and verify that the information was correct.  To perform that same task 10 years ago, before XBRL was used to report financial information to the SEC took maybe let's say 1 hour per financial report, so somewhere around 5,734 man hours. Let's use that number.

So above I mentioned a 20 minute task that was turned into a 3 second task to enter information.  Extracting information went from a 5,734 hour task to a 3 hour task. (You can re-run that process yourself using this spreadsheet.)

How is that possible?  The answer is standards.  Think about the shipping container standard and how that impacted the world.

Now, technology changes such as artificial intelligence, structured information, and distributed ledgers will have an impact.  But it is standards that will cause the big changes technology is bringing to become epic changes with influence that is hard to imagine.

I don't have all of this figured out yet, but I have been brainstorming how to build the modern finance platform.

And I have put together a group that is creating the Accounting Process Automation XBRL Application Profile specification or standard. While several members of the group have built pieces that improve upon the current processes; the intent of this group is to enable the creation of things that are even better and help things interoperate even more.  We want to build reliable, dependable, safe, powerful, practical software that is proven to work.

If you might be interested in participating in this group, please contact me or request to be added to this Google Group.

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History of Accounting | From Record Keeping to Artificial Intelligence

The Importance of Continuous Audit and Real Time Disclosure