Imagine a future where the world goes digital, no one reads newspapers because we get our news online; no one uses cash, because we all have debit or credit cards. Technology can be an instrument of change in the way financial reports are prepared and used. Corporate reporting and in particular financial statements can go digital too.
Digital financial reporting
The era of digital financial reporting has arrived. While investors considered that PDF worked well, that does not mean that PDF will, or should be where evolution in reporting halts. The innovation is corporate reporting which will impact the future. Investors value the assurance that companies and auditors provide for the annual report. As such, investors want the same degree of assurance over digital versions of the same content together with clarity to the extent and nature of assurance provided on the digital report.
Information exchange between different systems, belonging or not to the same organization, is no easy task. Yet achieving this interoperability will result in new, meaningful, cost-effective, easy-to-use, robust, reliable, repeatable, predictable, scalable, secure and auditable business information exchange across business systems.
Benefits of digital financial reporting
With machine readability of financial reports, computers can read the reported financial information, “understand” it, and help make sure mathematical computations are correct and intact throughout the report. They can compare reported information to mandated disclosure rules and make sure the report’s creator complied with them. This is somewhat similar to how manually created disclosure checklists are used as memory joggers.
- Reported information can be easily reconfigured, reformatted and otherwise repurposed without rekeying to suit the specific needs of an analyst or regulator.
- Ambiguity is reduced as digital financial reporting relies on well-understood IT practices where agreement on standard technical syntaxes are based on clear articulation of already agreed-upon financial reporting rules in a form that computers can effectively understand.
- Processes can be reliably automated because computers can accurately move information through the workflow. Linking digital financial information together based on the meaning of the information can be much more reliable than trying to link physical locations within spreadsheets, which commonly change.
- Software can easily adapt itself to specific reporting scenarios and user preferences because it understands the information it is working with.
This is not to say that humans will no longer be involved in creating or consuming financial reports. Clearly, machines will never be able to exercise judgment, which remains something only humans can do.
Digital Transformation impacts considerably on companies with its ability to fully utilise the latest technologies. If you wish to embrace digital financial reporting and have a keen interest in the future of digital transformation, Naazreen would be glad to assist you in stepping into the era of digital transformation and she is available on 2331636 or via e-mail at firstname.lastname@example.org .