Digital Financial Reporting

There are few things that are as precise, elegant, carefully engineered, and lovingly put together than a Swiss watch.  And that is how an XBRL-based digital financial report should work - like a Swiss watch.

In their most current XBRL Taxonomy Development Handbook, XBRL US provided a picture of a set of gears working together (see page 64) and say that it is "vitally important to engage all relevant parties during the [taxonomy] development process".  I could not agree more.

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The SWIFT Institute used the metaphor of an orchestra and pointed out that the stakeholders need somewhat of an orchestra leader to put the music together.  The paper provides excellent definitions of "harmony" and "dissonance" and explains the relationship between stakeholder harmony and information quality. This is very similar to the gears metaphor.

There are leaders and there are those who lead.  Leaders hold a position of power or authority, but those who lead inspire us.

Be one of those who lead.

CPAs will play a significant role in making sure XBRL-based digital financial reports "work like a Swiss watch" and that the "gears" are not grinding or skipping but rather running smoothly.  CPAs will be the orchestra conductors in the digital era to help make sure the financial reporting supply chain "music" is what it needs to be.  I believe that financial reporting can be significantly improved in terms of both efficiency and effectiveness.  Why should accountants toil in the salt mines each month to get the important financial information out to those that need it?

Digital is both the problem of increased information volume, information complexity, and the resulting information overload; and the solution to that volume/complexity/overload problem.  Rekeying information might not become a thing of the past era, but it will be significantly reduced.  Human/computer collaboration will be the way accounting, reporting, auditing, and analysis is done in the future.  Can you imagine doing accounting without a calculator?

Digital financial reporting can work like a Swiss watch if you know now to do it. Learn how to do it right.  Practice does not make perfect; perfect practice makes perfect.  Up your digital maturity. Understand that this is a paradigm shift, not an incremental innovation.

Inspire someone!

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