AIS and XBRL – Designing with Best Practices

AIS and XBRL Best Practices
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AIS and XBRL Best Practices
Introduction
Financial institutions are experiencing increases in volume, scope, granularity, and complexity of data with robust expectations on frequency, accuracy, completeness, and quality. Specifically, regulatory authorities need high-quality financial data at aggregate and granular levels. Many organizations are adopting standardized data via applying the extensible business reporting language (XBRL) or ISO 20022. XBRL is a digital business reporting standard used in more than 75 countries, including G20 nations, and over 125 regulators (Shah, 134). Indeed, the framework establishes data taxonomies that report business tax requirements, security filings, registration, regulatory reporting, climate change disclosures, and financial accounting. XBRL has numerous benefits, such as improving the exchange of reporting information and decreasing data asymmetries. In addition, it provides users with standardized formats that enable software to facilitate data exchange without migration. XBRL supports automated financial and nonfinancial data processing and facilitates access to granular data without forgetting the reported concept. The paper focuses on how Evergreen Devco Inc. can enforce XBRL's existing practices to promote financial reporting within the firm.
Small-Sized Firm Without an Accounting Information System and It’s Market Position, Product Type, and Business Line
Andrew Skipper and Bruce Pomeroy established Evergreen Devco Inc. in 1974. The company’s headquarters are in Phoenix, Arizona. Evergreen Devco Inc. has 54 employees and generates annual revenues of approximately $18 million (Adams, 1). The small real estate company specializes in multi-family development, property and asset management, commercial, leasing, and retailing. The firm has consistent performance over the years due to proper leadership and employee commitment that exceed the expectations. Evergreen Devco Inc., despite its size, has become a renowned real estate company. When the firm invests in new projects, it invites employees to participate. As such, some workers retire as millionaires. Besides, the company’s policy enables it to retain most of its employees, and over one-third of employees have been working there for more than ten years. Evergreen Devco Inc.’s employees enjoy significant profits from their investments and yearly trips overseas as they support underserved or struggling communities. The company is focused on reaping benefits in the long run, so it treats its workers well and engages in activities to help distinctive communities.
Although Evergreen Devco Inc. has been operating for over four decades, the small firm does not have an established accounting information system (AIS). In particular, an AIS refers to a system that a firm can use to manage, gather, process, report, store, and retrieve financial data when the need arises. The common users of AIS include managers, tax agencies, chief executive officers, accountants, chief financial officers, consultants, tax agencies, business analysts, regulators, and auditors. The primary goal of implementing AIS would be to facilitate financial information delivery effectiveness and efficiency (Muhammad, 185). Since Evergreen Devco Inc. is in the real estate sector, an AIS would positively affect its operations. The firm has been growing gradually and has become popular due to its engagements in community activities. In that light, an AIS would facilitate the effective exchange of information between relevant stakeholders. Although this organizational change might lead to workers’ resistance, Evergreen Devco Inc. should train employees and emphasize the benefits of the accounting change to workers and the company at large.
Six Best XBRL Practices that Can Improve Financial Reporting Within Evergreen Devco Inc.
XBRL would provide financial data flexibility for Evergreen Devco Inc. Currently; there has been a rise in real estate projects and strict scrutiny by capital market regulators. The Securities and Exchange Commission (SEC) emphasizes that companies should file digital reports that are machine and human-readable, particularly using iXBRL. Evergreen Devco Inc. should implement some of the XBRL best practices to improve financial reporting and enhance faster financial data exchange within the firm. First, an XBRL would provide Evergreen Devco Inc. with a detailed glossary that describes data elements as reference points for all crucial definitions (Shah, 136). Already, the small firm has well-defined financial terms, and it needs to improve the existing policy to align with the XBRL’s requirements. Notably, real estate companies are highly regulated to avoid fraudulent activities and oppressing property buyers. That is why the second most significant best practice would be to offer a template that regulators can use to understand, clarify, visualize, and define requirements (Troshani, 202). As a result, electronic documentation, policy statements, and consultations would become easy for Evergreen Devco Inc. since regulators would find it straightforward when reviewing its operations and financial data.
Third, filers will get proper guidance on the right way to submit data points, especially those that should be left blank, missing, or null. In addition, they will no longer encounter problems in prefixed naming conventions or periods (Shah, 136). The SEC or financial institutions publish the financial data filing regulations in most cases. Since Evergreen Devco Inc. deals with multiple banks, accountants and other money handlers would find it easier to keep proper and accurate financial records. Fourth, the other XBRL best practice that would benefit Evergreen Devco Inc. is pilot data collection that facilit...