The US Securities and Exchange Commission (SEC) is planning to implement a new computerized data-mining software, which will automatically dictate suspicious trade activities and send alerts at publicly traded companies.
The proposed warning system, which will be launched this year, will have a "rich capillary of information", constantly provided by companies through official filings including annual reports, as reported by The Financial Times.
Based on computer-readable "XBRL tags", the new technology will be able to compare financial data between businesses across the globe.
SEC risk, strategy and financial innovation division director Craig Lewis was quoted by the news agency as saying that the launch of the technology will take nearly nine months, however it might appear earlier.
The accounting version will examine whether a company "sticks out from the pack" in areas such as accruals, which are non-cash entries that can be manipulated by management, the news agency reported.
The system will also send alerts pertaining to factors including a high proportion of off-balance-sheet transactions, frequent changes in auditor and delays to earnings announcements.