Digital Financial Reporting

I build a lot of my own utility tools for working with SEC XBRL financial filings myself using Microsoft Access.  Generally, I don't put nice interfaces on the tools, I just use the database information and if I need to make something look better, I move the information into Excel and do that there.

But, I took the time to create some user friendly interfaces on some of the utility tools which I have built.  They are limited by my programming skills, but you can see these interfaces, which I think are useful to accountants, here.

User interface screenshots

The best way to take a look at the screen shots is to follow the link and just watch a slide show of the images. Take time and really look at what you see.

You may ask yourself, "How is he organizing the financial report disclosures and/or the entities the way they are organized."  The answer is metadata.  See how helpful that metadata can be.

The screen shots are pretty much self explanatory.  If you have any other ideas, let me know what they are.  I want to get software vendors interested in creating utility tools useful to accountants.

Big data is one of those hot buzz words.  But what is "big data"? This presentation by Amazon Web Services, Big Data and the Cloud a Best Friend Story, helps you understand the big picture.  This video provides a little more detail, What is Hadoop?. Mapreduce is part of big data, much more technical but it really helps you understand big data.

A few interesting statements from the presentations:

• Data is the new raw material for any business on par with capital, people, labor.
• Data is growing at 75x, IT resources to manage the data is growing at 1.5x.
• While relational databases are important, there are other important tools.
• A lot of this has to do with scaling efficiently

The FEI published a survey, SEC Reporting and the Impact of XBRL: 2012 Survey, which I believe exposes an opportunity for CPAs and other accountants who truly understand how to articulate financial information using XBRL and to software vendors who have products usable by accountants and other business users involved in the process of creating SEC XBRL financial filings.

The following are the highlights of the FEI survey:

• Companies across the board expect to take greater responsibility for their XBRL filings, with the percentage of respondents not planning to outsource XBRL at all over the next year increasing and the respondents planning to use full outsourcing over the next year decreasing.
• Respondents across the board projected increasing both the size of their XBRL team as well as the level of internal XBRL competency.
• XBRL is not expected to delay reporting calendars. The vast majority of respondents expect to file in line with the time frame of previous filings or faster.
• XBRL was the most often mentioned SEC reporting bottleneck.
• The biggest concern raised regarding XBRL compliance was to question the cost - benefit proposition of the XBRL mandate.

Notice the terms "bottleneck" and "cost - benefit proposition".  Another opportunity for CPAs and other accountants with the appropriate knowledge of how to express financial information properly using XBRL is to help software vendors make their software usable by these business users.

With all the SEC XBRL financial information of public companies available over the Internet and with the quality of software for business users such as accountants to understand SEC XBRL financial filings improving, it will be very easy to differentiate between high quality and poor quality SEC XBRL financial filings.

With the knowledge of the buyers of software and services is increasing, it will only get harder and harder for those who really are not qualified to express financial information using XBRL well to hide amongst the herd.

Clearly additional pressure will be applied by the SEC who has been complaining about XBRL financial filing quality.

With digital financial reporting being not only inevitable, but imminent; taking the plunge into digital financial reporting seems wise to me.  What will you chose?

Are you building or buying the right software applications?  This presentation, Semantics Overview, helps you understand if you are.

Smart data/applications:

• Knowledge baked in
• New knowledge can be inferred/added
• Agility to adapt to ever-changing conditions
• Semi-automated data integration
• Machine intelligence

I predict that you will see digital financial reporting applications with these characteristics in 1 to 2 years. But, before software applications can work in this manner, they need the right metadata.  The metadata is key to making them work.

These applications will work better than today's legacy software applications for creating financial reports such as Microsoft Word which have no knowledge or understanding of financial reports or financial reporting.  These applications will generate perfectly modeled XBRL output without their users ever having to understand anything about the XBRL technical syntax.

Not only are these types of software applications inevitable, they are imminent.  Like I said, 1 to 2 years.  Seem hard to believe?  Well, I have mentioned these sorts of things pretty much every year for the past 14 years, for example here in 2009.  I sometimes described this sort of application as something like a "modifiable TuboTax" type application for creating financial reports, driven by metadata.

Users won't adopt digital financial reporting and these types of applications because of regulatory mandates; they will adopt digital financial reporting because it is better and easier than today's approach.  Hard to believe given today's XBRL software.  However, once you see this software you will become a believer.

This is what XBRL has always been about; semantic, model based, structured authoring.  The ability to exchange this information between software applications and analysis is a byproduct.

Check out the presentation, decide for yourself, place your bets on the table.

For more information, read the PWC paper on Disclosure Management and the Project10X executive summary.