Real-Time Reporting: How IT is Transforming Financial Accounting

Real—Time Reporting. Another impact of IT on financial accounting is the timing of inputs, processing, and outputs Financial statements are periodic, and most large companies traditionally issue them quarterly, with a comprehensive report produced annually With advances in lT that allow transactions to be captured immediately when the business activity occurs, theAlS can produce financial statements almost in real time. Of course, some of the adjustments that accountants must make to the records are not done minute-by-minute, but a business can certainly track sales and many of its expenses continuously. This is especially useful to retailing executives, many of whom now use dashboards Interactive Data and XBRL. A problem that accountants, investors, auditors, and other financial managers have often faced is that data used in one application are not easily transferable to another. This means that accountants may spend hours preparing spreadsheets and reports that require them to enter the same data in different formats over and over. Interactive data are data that can be reused and carried seamlessly among a variety of applications or reports. Consider, for example, a data item such as total assets. This number might need to be formatted and even calculated several ditferent ways (e.g., at cost, net realizable value, book value, replacement value) for reports such as filings with the SEC, banks, and performance reports. With interactive data, the data are captured in the database only once and can be used wherever needed. Interactive data require a language for standardization that "tags" the data at its most basic level. As an example, for total assets, this would be at the detail level for each asset. Extensible business reporting language (XBRLI is the language of choice for this purpose. As of 2010, the SEC requires public companies to file their financial reports in XBRL format In addition, many companies, software programs, and industries are beginning to incorporate )(BRL for creating, transforming, and communicating financial information. We will discuss cloud computing later in this chapter, but at this point, we want to make you aware of this technology with respect to XERL XBRL Cloud made a viewer available that allows anyone to examine SEC XBRL financial filings, and it is called the XBRL Cloud EDGAR Dashboard? When a filing is posted on the SEC website, )(BRL Cloud takes the information and adds a new line to the Dashboard that indicates the name of the filing company, the form type and date filed, the percentage of extended elements, the creation software that was used to prepare the filing, and free validation checking A description of some of the Dashboard's features can be found at xbrl squarespace com. We discuss XBRL in more detail in mpter 2, and you can learn about the current status of XBRL at www.XERL.org. l