Analysts and investor advocates are calling on public companies and policy makers to push past the learning curve in using data and technology to improve financial reporting.

The CFA Institute, a group of certified financial analysts, says in a recent report literally everyone with a stake in capital markets stands to gain from greater use of data and technology to reform the financial reporting process from end to end. Companies could structure data earlier in the reporting process in a way that would not only save them time and money, but also would reduce error, a commonly cited obstacle to greater use of structured data as it is now made available to investors through the XBRL-filing system.

The Securities and Exchange Commission requires all public companies to file financial statements not only in the traditional paper format, but also in the machine-readable XBRL format, in a process that began with voluntarily filings more than 10 years ago. The XBRL rendering is not subject to an audit requirement, and the SEC has given companies plenty of latitude to work through persistent errors that investors said made it impossible to rely on the data. More recently, the SEC decided to allow companies to file their financial statements through inline-XBRL, which integrates the paper filing and the data-driven filing into a single process.

“Companies continue to view structured reporting as a compliance exercise and cost center rather than as a useful tool,” the CFA report says. “As a result, most companies do not structure their data into a machine-readable format at their source -- that is, early in the financial reporting process.” By following the two-tiered process where information is processed following traditional measures, then prepared into the interactive format as an added step, structuring is not producing the intended results, the report says.

As a suggested step to address the problem of error-ridden filings, the report stumps for the approach taken by regulators in the banking sector, where entity-specific, custom extensions in XBRL filings are prohibited. In certain instances, financial institutions are required to use software that provides automated error checks along with quality assessment checks, the report says.

Structuring data early in the data supply chain process would make the information more timely and more useful to companies, the report says, not to mention auditors and even regulators. It also would produce more effective audits, and ultimately produce better information and better decision-making abilities for investors and regulators alike.

Going forward, the analyst group is advocating for use of structured data not only in financial reporting, but also in other releases and regulatory filings, like earnings releases, Form 8-K disclosures, proxy statements, and even tax reporting. “Companies thus need to structure data early in the reporting process and start thinking of structured data as a form of communication, not merely as a form of delivery,” the report says.