The Future of Financial Reporting & Dashboarding
This are my view points on the next generation of Financial reporting:
The present day financial & banking investor has grown into a vehicle for a stricter pragmatic approach towards financial reporting focussing on publicly held companies after the debacle of major fannie mae & livedooor to name a few.
Financial account AVP's & executives need to understand & adapt to a more demanding approach of the investors hence to suceed the companies need to understand this new requirements & leverage the compliance factors to enhance transparency.
in the present day a stakeholder is no more a novice he is interested in knowing how the companies are run at a dogma level for example he is interested in knowing how much is an executive paid, what are the costs associated with social & charitable initiatives by the company & more.
This change in the investors thought process had lead to major compliance initiatives like SOX, J SOX, & Basel two t name a few, this compliances have lead to to a more novel concentration of stake holders on indices depending up on corporate governance, integrity of the audit process, executive compensation & stock ownership.
Now one of the primary initiatives in the past few Years are IFRS reporting based upon the directives of International accounting standard board (IASB) which is music to the ears of prospective investors & stack holders as they can analyze & invest in the companies with more confidence at the same point in time this structure brings more complex requirements for the account executives etc.
So the FASB & IFRS are focussing on a principles based approach rather than a rule based one & this makes the financial executives uneasy due to complex processes but at the same time IFRS has a fair value accounting approach where in assets & liabilities are marked to a market proposition or value rather than a historical value.
So the core focus of investors has been to gain an insight into the financial & non financial metric's of business continuity to maintain the business and sustain the business in a long run.
A large chunk of the fortune companies like Alcoa, PNC, Citigroup, Kia, Walmart to name a few are now interested in having a better public image so they are also interested in business indicators & metric's belonging to social activities such as diversity hiring, working conditions work force retirement etc
“ACHTUNG BABY”
So here comes the pivotal point ( Ice cream for our thought) of this musing & success
What is the next generation of financial reporting?
Well to me it seems like XBRL which comes from the family of XML which is a taxonomic hierarchical semantic tagged based markup language built upon formula, XML elements & XSLT transformations.
Source: www.XBRL.org
So lets look at a sample XBRL code snippet
<formula:formula xlink:type="resource" xlink:label="formula" implicitFiltering="true" aspectModel="dimensional" source="eg:variable1">
<formula:aspects>
<formula:entityIdentifier value="'AXYZ-1234'"/>
</formula:aspects>
<formula:aspects source="eg:variable 2">
<formula:period/>
<formula:unit source="eg:variable3">
<formula:AddBy source="eg:variable4"/>
</formula:unit>
</formula:aspects>
</formula:formula>
So basically here our source variable which is “1” Source
Variable 2 is an period entity
Variable 3 is a unit entity &
Variable 4 is a additive entity
So the next generation of best of breed reporting architectures may be built on this uniformed reporting language known as XBRL
So the best practices for the next generation of financial reporting :-
Actively participate towards the XBRL community.
Storing the Business specific data in XBRL format for reporting.
Oracle, Netezza, Cognos etc should Leverage this standard of financial reporting architecture and should come up with novel ideas of sourcing tis data into their business intelligence tools.
Building a compliant & competent Business Intelligence tool that could leverage upon XBRL format & access the XBRL data in to the Business Model & Mappings.
Reduce the dependency on excel reporting it is known to the Oracle business Intelligence community that the most replaced tool today in the market for business data analysis & financial analysis is MS Excel.
Aligning the process of sourcing & collecting the operational results, financial results, social results & environmental results into a unified process.
Disclaimer:
This are my basic view points on the best practices as an individual.
References: Dowjones Sustainability Indices
Standard & Poor's
IFRS & IABS website
