Although General Accepted Accounting Principles(GAPP), currently the most commonly used set of accounting rules in the US, has been adopted for years and numerous regulations well govern the details of financial reporting, surprisingly things are not always clear-cut and in fact very complicated. Even the most straightforward P&L Statement (or Income Statement) can often times be misleading. Investors often want to see the breakdowns of the revenues and costs by various business units, countries or regions, product/service lines, which could offer the most telling information on the growth trends of the company, the effectiveness of the management and their strategies, especially for new investments or specific competitive markets. However these information are often left vague, missing or poorly calculated. Companies can choose to enhance or hide any of these information. Revenues and various costs can be mixed or distributed differently among business units or product/service lines, or just simply put in some obscure bucket. For example, Amazon’s cloud services AWS, which holds the No.1 market share among all global Public Cloud Service providers and considered their fastest growing business sector today(although less than 10% of total revenue), is only listed in “North America, Other” category on their quarterly reports combined with several other smaller lines of investments or services. This may not be intentional and Amazon is definitely not the only large company having this issue for undisclosed reasons. Some may result directly from the challenges of corporate finance governance and reporting process. The calculations of various costs on P&L reports could be even more interesting, especially when it comes to services where both new and traditional product-line activities are linked or unlinked based on internal decisions.

More confusions exist for a corporation reporting from operations in multiple countries. Since International Financial Reporting Standards (IFRS) and US GAAP are inconsistent in many ways, companies have to convert themselves, not just on currency fluctuations, to make into one roll-up report. IFRS is broadly adopted by 100+ countries today, especially in European countries. China and Japan are also trying to convert their accounting rules into it. Thankfully in recent years, increasing calls for actions have raised the urgency of this issue and internationally organized efforts for the convergence of the international accounting standards are under way.

For corporate finance departments, sometimes the difficulties to get a simple, clear and unbiased roll-up financial report on some simplest concepts of revenues and costs from a certain area of the business frustrate even themselves. The challenges often come from the complex corporate structure and the diverse systems used to store and track the business data. With numerous data entry points, multiple legacy source systems owned by different groups, interpretations and controls of scattered and inconsistent data by different reporting personnel, the cumbersome and often manual reporting processes, etc., it’s totally time-consuming, costly, exhausting and error-prone to produce either the near-real-time market reports or the final earnings.

TriStrategist believes that technically the progress of the Big Data technologies today could trigger a revolution in the near future on corporate accounting and finance reporting. Efficient Big Data analytics could almost immediately render many old systems obsolete as any financial or business data in any granularity from any market could be allowed in raw data formats and collected generically and instantly for all factors of the business. They will be saved in the simple, unlimited repository in the cloud, as one source system only. With some straightforward and intelligent rules built-in (the true meaning of the data will matter, regardless of different standards), these data can be processed instantly in parallel, analyzed in very little time, and passed down to various downstream channels to form reports or visual views, either for aggregated periods or real-time volatility.