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 Bearing-point 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?