Financial Reporting in Flux
by Gerald Trites, FCA

Financial reporting has been undergoing a process of change for several years. At one time, the focus was on the financial statements, and much else that was reported was an offshoot of the statements. Accountants spent much of their time preparing these financial statements for "general use" in accordance with "generally accepted accounting principles." That still happens of course, but there has been a lot more going on as well.

Companies have been expanding the types of data they present to stakeholders. A research study published by the CICA last year identified more than 50 types of information presented by companies, of which the financial statements is only one type. The rest of it consists of major items like the MD&A and less extensive items like the President's Report.

What's more, the data is being presented much more often. Where it was originally presented annually, then quarterly, now there is a constant flow of information. The central vehicle for presenting this information has become the corporate website.

Add to this the idea that companies have been organizing their data through the use of ERP systems and integration software and you have a scenario that is going to evolve more quickly than many of us imagine.

Companies will be called upon the make available increasing quantities of their data to the public directly from their systems on a real time basis. That is the trend. companies will deny it and resist it, but it is bound to happen through the demands of stakeholders.

The implications of this are tremendous, not the least of which are issues around establishing data integrity and obtaining independent assurance. But it does mean that there will be a need for a standard with which the data can be presented and used. Filling this need is when XBRL will achieve a new level of usefulness. Indeed, that is a role in which XBRL will be able to achieve its full potential.