Digital Financial Reporting

Yair Holtzman, in his AccountingToday article Automation: Don't panic!, does one of the best jobs of explaining what is in store for professional accountants over the next five years that I have run across.  Mr. Holtzman correctly points out that the next five years is an opportunity:

But don’t panic — while a significant number of accounting positions may be lost as machines perform redundant, repeatable and time-consuming tasks, many employers also stand to benefit from the transition. Accounting firms will need to shift manpower to focus on developing more strategic, consultative and value-additive initiatives within their niche practices.

He goes on to point out:

Rapid technological advances have led to innovation in the accounting profession at a pace that will likely accelerate over the next five years. Today’s midsized accounting firms will need to navigate around numerous technological advances as the digital economy continues to evolve. This metamorphosis will likely require a shift to higher-end, value-added services, a working knowledge of cutting-edge technologies such as AI and blockchain and the ability to employ big data analytics in optimizing strategic business decision-making.

Yair is not alone in his beliefs.  Deloitte's vision of The Finance Factory, Blackline's vision of financial transformation and the modern finance platform, my view of the utility of an XBRL-based general purpose financial report, and other visions of what the future might hold are pointing to rapid change enabled by technology.

It is not like change has never happened before within the institution of accounting. As I pointed out in Introduction to the Fact Ledger, double-entry accounting was first used in 1211 AD.  But double-entry accounting did not come of age until between 1299 AD and 1300 AD.  And it was not until 1494 AD that double-entry accounting was documented and proliferated.  Change take time.  Many things take less time because of the communications enabled by the Internet.

An example of the sorts of things that will change can be understood by looking at the working proof of concepts that are being created for evaluating XBRL-based financial reports.  This evaluation report combines the capabilities of a number of separate tools into one set of capabilities. So say, if you combined what XBRL Cloud was doing, what XBRLogic was doing, and what I am doing; you can see the hand writing on the wall rather clearly.

The next five years will be interesting.  Want to be ready?  Consider reading Computer Empathy.

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