There is a burning need to revolutionise data standards worldwide, in conjunction with the creation of a global taxonomy registry and an open taxonomy innovation platform. Those are the findings from a digital transformation thought leadership brief recently released by the Institute of Management Accountants (IMA®).
In Business Reporting in the Fourth Industrial Revolution, it is made clear that stakeholders depend on trustworthy, auditable, accessible and machine-readable information using open data standards (such as XBRL® tagging). The brief, which also incorporates in-depth research from Workiva, supports a sense of urgency for open data standards, taxonomies, digital delivery technologies and guidance that will enable more connected and intelligent reporting.
With these advances in place, business leaders can ensure critical financial, non-financial and other emerging forms of external reporting (EER) are collectively accurate, auditable, complete, consistent and fit for purpose in the Fourth Industrial Revolution.
About the research
During the past 18 months, Workiva conducted an in-depth study of regulated banking entities to better understand the challenges they face in the areas of risk, cost and resource management, efficiency, compliance and reporting. The research yielded results universally relevant to all industries.
The study involved the assessment of all major statutory reporting platforms, forms and the regulatory compliance ecosystem. The insights gleaned around compliance practice commonalities and recurring issues faced by entities across different sectors and geographies, highlighted new optimisation opportunities across the end-to-end compliance process to achieve a holistic and integrated outcome.
Findings of the research
The research uncovered the day-to-day challenges a regulated entity faces to satisfy regulatory reporting and disclosure requirements. The regulatory data ecosystem is fragmented at various levels and within numerous variables, including data formats, modes of submission, data definitions for certain common elements, business rules, access controls and validations for similar reporting elements across different forms and regulators.
The following snapshot illustrates a financial institution’s minimum scope of compliance:
Source: Institute of Management Accountants, A Digital Transformation Brief: Business Reporting in the Fourth Industrial Revolution
The three main recommendations emerging from the brief are as follows:
- An urgent need for an open, integrated and holistic compliance model that will benefit all stakeholders in streamlining the compliance and reporting function, and facilitate access to timely actionable data to make informed decisions.
- Ensuring standard setters and framework developers are committed to the repository as the authority of digital taxonomies for industry bodies of knowledge and best practices around reporting and compliance.
- Producing a high-level solution blueprint for implementing a global digital framework within products. Using an understanding of the regulatory ecosystem and purpose with an objective of assessing the value that digital transformation programs provide to key stakeholders.
The last 10 years have laid witness to new financial and non-financial reporting requirements and renewed vigor for internal controls over data well beyond just financial reporting data. Plus, during this time, we have seen the emergence of digital agility, big data and business transformation embracing the usage economy.
Today, executives rightly want more meaningful information when, where and how they need it. They also want it visualised in a way they can easily understand.
The biggest takeaway from this brief is that it is the industry’s forward thinkers who will shape the future: “the accounting and compliance professionals who master the critical data in internal and external reports that drive the business will be invaluable in the Fourth Industrial Revolution.”
The brief serves as the link and facilitator between the past, the present and the future of compliance. The whole purpose of the research, and the brief, is to stimulate robust and meaningful dialogue between all key stakeholders.
The goal is to propel compliance and business reporting into transparent, innovation-friendly, actionable and dynamic changes which prepare us well for a future already in transformation.