The CFA Institute confronted the topic of data and technology in financial reporting in a recent paper titled “Data and Technology: Transforming the Financial Information Landscape”. The paper’s vision for the future focuses on a broader and deeper use of structured data. The paper suggests that investors are hungry for more financial data in a structured format. The current XBRL requirements apparently have only whet the investors’ appetites.
But what does broader and deeper mean in the context of structured data? The paper says that broader means applying structured data, such as XBRL, to all areas of financial reporting, such as earnings releases, proxy statements and Form 8-Ks. And deeper means that within these reports, more information should be tagged, such as all parts of the annual report, including the MD&A (probably using text block tags) and the audit report.
Observations in the paper are not only from the perspective of the investors, but also from the reporting companies, auditors, regulators and policymakers. A main emphasis of the paper, for all parties involved, is for greater efficiencies and greater transparency in financial reporting, primarily via structured data.
The paper is authored by Mohini Singh and Sandra Peters, with Kurt N. Schacht as a contributor. I work together with Mohini on structured data issues since we are both members of the XBRL US Data Quality Committee. And I can tell that the valuable experience and research of Mohini and the CFA Institute are weaved throughout this paper. Both Mohini and the CFA Institute have been involved with XBRL for several years.
If you are an individual involved in financial reporting and want to know what’s on the horizon, I suggest you read the paper. And regulators or investors that are involved with structured data will find it just as valuable.
Based on the investors’ desire for more structured data, one take-away seems very clear from the paper: the days of the statement that “no one uses the XBRL information” are long gone.