Recent corporate accounting scandals ranging from Enron to WorldCom and the Rusnak/Allfirst scandal have impacted on IT spending patterns, according the latest PricewaterhouseCoopers Technology Forecast. Going forward businesses will be investing in real-time financial and productivity reporting systems as well as business intelligence driven by new standards such as extensible business reporting language (XBRL).
“Businesses will be aiming to be able to close and balance their books at the end of the working day using the latest financial reporting and business intelligence technologies,” said Eric Berg, director of PwC’s Global Technology Centre and editor-in-chief of PwC’s bi-annual Technology Forecast.
“The number of real-time enterprises is on the rise, with the need for real-time, end-to-end reporting and analysis on business processes. The scandals caused by Enron and subsequently followed by WorldCom and others showed stock exchanges and regulatory authorities that more action was needed and new technologies such as XBRL are being snapped up to ensure that ethical business practices are implemented every day.”
XBRL is an electronic format for simplifying the flow of financial statements, performance reports, accounting records and other financial information between software programmes. Until recently there were no standards that would allow financial information to be automatically communicated between different applications. According to Berg, XBRL will save companies time and money when information consumers, inside and outside a firm, analyse complex date. The standard, a cousin of XML, is supported by a consortium of over 200 corporations, financial markets, accounting firms and regulators, including the New York Stock Exchange and the Securities and Exchange Commission.
“The effect that XBRL will have on the business community will be more significant than the transition from paper and pencil analysis of financial information to the use of spreadsheets. In the next three to five years, XBRL will move from the early adopter phase to becoming the generally accepted way to report business information”, said Robin Menzies, partner in PwC’s Irish Global Risk Management Solution Practice.
Joe Tynan, a partner in PwC’s Global Technology Industry Group Dublin division, said that Irish companies and the public sector could benefit from the advent of XBRL. He said they “require real-time intelligent data to make better informed decisions on controlling costs and on managing demand. IT efforts over the next few years have to focus on getting this intelligent real-time information into the hands of the people who need it, when they need it.”
By John Kennedy