Cisco Systems, Inc., pioneered the concept of a “virtual close” of the financial records. A virtual close is described as follows:
The traditional practice of closing a company’s books on a monthly, quarterly, or annual basis is out of sync with the dynamics of the new economy. In the past, the financial close and subsequent report generation was a static, scheduled event. It consumed days, weeks, and months and was based on a “thick black book.” The new paradigm is driven by dynamic information accessible anytime and anywhere. Web based reporting tools allow for real time access to the very latest data and make interaction, summary to detail drill downs, and various data views possible. The result is fast, intuitive, on the fly creation of information views targeted for a specific analytical need to answer a specific question.
Source: Virtual Close—A Financial Management Solution, Cisco Systems, Inc., and Bearingpoint Consulting Solutions Brief, 2001.
Additional information about the virtual close can be found at Cisco’s Web site, which is linked to the text’s Web site at www.thomsonedu.com/accounting/warren.
a. How is a virtual close different from traditional practice?
b. How does the virtual close impact the decision making ability of Cisco’s management.