XBRL and Data Standardization: Transforming the Way CPAs Work; Save Time and Improve Reporting
Willis, Mike, Journal of Accountancy
Accountants spend too much time moving data from one financial reporting spreadsheet to another, leaving less time for analyzing information to enhance reporting integrity and improve management's decision making. The extensible business reporting language (XBRL) can reduce time spent manually finding and preparing information and improve data quality through fully automated information exchanges among disparate software applications. Once CPAs can electronically receive, validate and send standardized information, they can more quickly analyze and confidently redistribute it to managers, stakeholders and others for use in better informed decision making.
This article describes how XBRL-enabled data standardization maximizes speed and accuracy as information moves between one or more organizations' accounting or analytical software. While these programs may be flexible and convenient, they often can't detect or prevent transcription errors that commonly occur in manual data transfers.
A PROACTIVE APPROACH
The accounting profession and those it serves benefit from standards governing reporting and auditing. It follows that standardizing information formats would help CPAs gather, manage and report information more quickly, efficiently and accurately.
Consider how much CPAs could enhance their analysis and recommendations if the information they need was transferred automatically from its respective sources into company spreadsheets without the hands-on validation and manual transfer accountants and others commonly perform. Imagine further that data sources could automatically export new information to a range of designated spreadsheets as soon as it was created. In such a scenario, CPAs routinely would nave me latest version of available data from all sources and thus be able to expand the scope of their analyses and to report more frequently for little or no added cost. Improvements like this are possible with the help of standardized data formats, XBRL-compliant software and reengineered corporate reporting and analytical processes.
XBRL-enabled standardization makes it possible to use the same data seamlessly on any computer hardware, operating system or application. This simplifies the information transfer process, or "supply chain," by making it easier to automate the procedures that shuttle data among spreadsheets, databases and publishing programs. It's easier to design such programs when the data elements they process are clearly defined in terms of their meaning, currency, period and type, and that's exactly what XBRL does.
But such advances won't happen without active support for the widespread adoption of XBRL, which CPAs can provide by working to
* Understand XBRL. Accountants should expand their knowledge of XBRL and other information and Internet standards that improve reporting processes.
* Make XBRL tools more accessible. CPAs should encourage software vendors to embed XBRL capabilities as standard features in their products.
* Move XBRL into the supply chain. CPAs must understand the extent of human intervention in the data access, validation and analysis aspects of their clients' and companies' reporting processes so they can make informed recommendations on deploying XBRL in accounting software and information processing systems.
TAKE A CLOSER LOOK
Ask the following questions to assess your organization's dependence on manual steps in reporting processes:
* How many spreadsheets are involved in company reporting processes? …