Reengineering business reporting creating a test bed for technology driven reporting

• Autores: Miklos A. Vasarhelyi, Michael G. Alles
• Localización: The International Journal of Digital Accounting Research, ISSN 1577-8517, Vol. 8, Nº. 14, 2008, págs. 95-133
• Idioma: inglés
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• Resumen

  • Building on the work originally done for the Enhanced Business Reporting consortium of the AICPA, this paper develops a test bed for innovation in business reporting. As with flying test beds in aviation, the object is to explore the impact of new technologies and techniques rather than to create a product intended for immediate implementation. The starting point of our analysis is that if the financial reporting system was being built from scratch today, it would look very different, taking into account fundamental changes in the two drivers of financial reporting: First, the dominance of market making by professional investors, which includes such intermediaries as pension and mutual funds, which is how most ordinary individuals interact with the market; Second, the reduction in the variable costs of disclosures to technology-enabled firms, while time taking a broader view of the cost of reporting to include the opportunity cost to the firm from faulty disclosures and the cost to professional investors of having to extract the data they need from statements that were not designed for their needs.

    Taken together, the consequence of these two changes is that a system being designed today has to rethink the entire process by which financial data held by the firm is translated into decision relevant information by users. This process takes place both within the firm and outside of it, with a handover of financial statements taking place at the boundary between the firm and its users. Given these changes it is time to ask whether the location of that handover boundary point is still appropriate: whether the firm should continue to aggregate and condense information extensively before releasing it, or whether sophisticated users would prefer to have access to more information in closer to its raw format so that they can manipulate and aggregate it as they see fit. Based on this conceptual model we discuss the building blocks of a 21st century reporting system and the technical architecture needed to implement it. It is our hope that this paper will help create an open source test bed that will develop new ways to measure, manage and communicate firm performance in the 21st century.