Digital Financial Reporting

My last blog post helps to provide a definition of what I am calling financial integrity. The post before that helps see how financial integrity is achieved differently on the medium paper than it is with the medium XBRL. In this blog post I endeavor to show how financial integrity can be leveraged because it is expressed in a manner usable by software applications.

Imagine having a job on the starship Enterprise and working with James T. Kirk, its captain. Imagine that you were on the accounting staff (I am sure there were accountants in Startrek) and that Kirk needed a financial statement so he could see how he was doing relative to his budget.  What would that financial statement look like?

You may not need to imagine this for long. Consider this Wired story about how the tablet will change the world.

Imagine that some of the knowledge of accounting and financial reporting was in a form that computers could read and understand. Imagine that a computer application could help you read that financial statement, leveraging the accounting information. Think pivot table. Think visualization. Consider the graphic below and how you might move from place to place in a financial report, from summary information to detail information, leveraging the financial integrity of a financial statement. Or if you were comparing financial information between periods or between companies.

From Wikipedia

None of this is done using magic. If you ever used a navigation system in your car or used Google Earth or Google Body Browser or other such tools.  How do those things work? Structured information. Meta data. Standards. No magic involved. Take a look at this page. Look at the geometric diagrams on the page. Notice the red dots in many of the diagrams. Those dots are connections. Computers can leverage those connections to achieve things like the rotating diagram above.  All we need to do is establish the connections.

We accountants are pretty good at expressing financial information with financial integrity on paper. We will learn to do the same thing using the XBRL medium. When we do and when software leverages the financial integrity, we will have new interesting and useful functionality at our disposal.