Digital Financial Reporting

Deloitte is articulating a vision of what they call "The Finance Factory".  I buy into that vision.  Here is how Deloitte describes the Finance Factory:

The finance factory handles core finance processes, and connects to finance centres of excellence and outsourcing partners in a hub-and-spoke model.

There’s no paper, anywhere. Employees use cloud-based apps on mobile devices to transact their business, and highly standardized, simplified, workflow-enabled business processes handle the rest. Automated controls and intelligent process monitoring and analytics keep watch over core, extended and outsourced process performance, exceptions and service levels to help minimize rework. Finance managers receive event-driven, real-time updates thanks to new integration tools and advances in in-memory processing.

The close process is continuous, if not yet real-time. A daily soft close is the new norm, made possible by visual close management tools, integrated sub-ledgers, daily time capture, journal workflows, reconciliation tools, as well as automation of consolidation, foreign exchange, allocation and intercompany transfers. Finance teams now simulate pre-close results and can support the continuous development of the MD&A throughout the close process.

The description of the vision is maturing.  Last year I heard the term "lights-out finance" explained in broad brush strokes.  Now, I would point you to these Deloitte documents that help paint the details of the vision:

• Close, Consolidate, Report
• The Future of Operational Finance
• Modernizing Finance in Private Companies
• Finance 2025

Others provide insights into the possibilities but refer to the same thing using different terms.  "Financial Transformation" and "Finance Digital Transformation" and "The Modern Finance Platform" and "Digital Finance" and "Mirror World" are some of the different terms used:

• Blackline, Financial Transformation and the Modern Finance Platform (Video play list)
• Blackline, Continuous Accounting
• Rutgers University, Imagineering Audit 4.0
• Gartner, Enhanced Finance Controls and Automation Fills the Gaps in ERP and CPM Processes
• BearingPoint, The Exponential CFO
• PWC, The Future of Finance | Redesigning Finance for the Digital Age
• KPMG, Clara - a Smart Audit Platform
• EY, Digital Transformation
• BDO, A Guide to the Digital Transformation
• RSM, Digitization and Digital Transformation for the Middle Market

Also, consider that the end or OUTPUT of The Finance Factory is INPUT into some other system for, say, the analysis of financial information or RegTech systems used by regulators or lendors.  For example, creating a discounted cash flow model using the information from a financial report is a step after information leaves The Finance Factory.

So, the vision is great.  But how do you actually get this vision implemented?  Well, of course, the giant consulting firms like Deloitte would tell you to hire them.  But even if you hired Deloitte or someone else and paid them a bunch of money, how would they actually implement all that "stuff"?  Here are the specific pieces that I came up with:

• More Information on Deloitte's vision of The Finance Factory
• Accounting Process Automation XBRL Application Profile
• Open Source Framework for Implementing XBRL-based Digital Financial Reporting
• Method for Implementing a Standard Digital Financial Report Using the XBRL Syntax
• Step-by-Step Guide to Implementing Method
• Intelligent XBRL-based Digital Financial Reporting (Reference Material)
• Computer Empathy (background material)

I would not encourage people to "role your own" solution.  My personal view is that the best approach is to purchase off-the-shelf software where you can.  Now, very little software exists currently.  That will change.  I would encourage you to ask software vendors if they use global standards or if they use proprietary formats and approaches.  Avoid proprietary formats and approaches, go with global standard approaches and formats supported by software vendors.  That way, if you are not satisfied with one software vendor you can easily switch.  If you cannot find the software you need, then wait.  This transformation will take years and years.