Business process and reporting
Traditionally, business process can be classified into three major different event categories: operating events, information events, and decision/management events.
Management can reform the business process to obtain competitive advantage - Michael Porter has presented a famous value chain to define a set of business activities that add value or usefulness to an organization's products or services.
Business process is the basic element to form a live organization'. A spaceship can't fly without navigator; similarly, reporting is important for management to review, control and analysis the daily business process operation.
Financial information systems
Accounting system provide a financially oriented view of the business processes (activities). The current accounting system architecture is based on the concept of double entry book keeping.
First purposed by Luca Pacioli in about 1300 AD it set the principles for accounting systems development. Today, the common traditional accounting system design is view driven; the desired views of business data shape how business data is captured, stored and used.
It was designed to provide particular information to support specific functions such as logistics, sales, HR and so on. The newly event-driven IT application architecture is more highly rated by the users.
To design a quality IT application requires a thorough understanding the business process. The key to better information systems requires not simply an understanding of current business operations but also the desired business operations. Furthermore, systems engineer need to understand how the user interprets the data from the system.
Outline the process by SIPOC and a process map
Many tools are useful for mapping the process model, such as UML, use cases, data flow diagrams and so on. In addition, two six-sigma methodology tools are available during reporting system engineering.
The first one is SIPOC (Suppliers, Inputs to the process, Process the team is improving, Outputs of the process and the customers that receive the process outputs (sometimes the requirements of the customers)).
The SIPOC can be used by a team to identify all relevant elements of a process improvement project before work begins.
The second tool is the process map - a hierarchical method for displaying processes that illustrates how a product or transaction is processed. It provides a visual representation of the whole operation. Process mapping comprises a stream of activities that transforms a well defined input or set of inputs into a pre-defined set of outputs.
Systems engineers can use these two six sigma tools to outline the system requirement and list the important outputs that the system should not missing. The benefit of these two six sigma tools is that they give a more comprehensive view and allow structural thinking when mapping the process.
One of the evolutions of the reporting system is the XBRL (eXtensible Business Reporting Language, based on XML). It will standardize the business reporting terms format, so stakeholders can access and understand the business process results more efficiently.
The basic idea for XBRL is to provide a computer readable identifying tag for each individual item of data. XBRL is create once, use repeatedly.
The history and development of XBRL
Charlie Hoffman was the father of XBRL; he created and completed the first XBRL prototype in October 1999. The financial statements of ten companies were used to further test the concept of XML-based financial statements.
In August of 1999, the AICPA established a self-funded, non-profit group called XBRL.org to oversee the implementation of the new language. In April 2000, the first specification was released for public comment and six months later the first taxonomy was issued in US.
XBRL is being developed by an international non-profit consortium of approximately 250 major companies, organizations and government agencies.
The XBRL steering committee members include financial, accounting, software and governmental communities from around the world.
Member organizations include Microsoft, ACCPAC, Oracle, Deloitte & Touche, IBM, Hyperion, and the American Institute of Certified Public Accountants (AICPA). The goal of the steering committee is to create a standard specification for industry-wide use.
How XBRL works
XBRL consists of three major components: specification, instance document and taxonomies. Specifications provide the fundamental technical definition of how XBRL works.
The main, current specification for XBRL is version 2.1. An instance document is similar to the programming of a bar code reader. It contains the code for the tags and the structure that belongs to the tagged data.
Instance documents are built from a combination of XML specs and XBRL, structured to produce local accounting standard formatted financial statements. The document provides data plus structure for machine recognition and human readability.
XBRL is the new standard for business reporting. It enables automated processing of business information by computer software.
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- Essentials of XBRL: financial reporting in the 21st century Bergeron, Bryan P Hoboken, N.J. : Wiley & Sons, c2003.
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- Building public trust: the future of corporate reporting Dipiazza, Samuel A New York : John Wiley & Sons, c2002.
Leong Kong Sang Kelvin MBCS is a business analyst at Mk Electric (China).