XBRL – a standard for now and the future of compliance reporting in the US
XBRL has been around for a few years now. At the time of its introduction, much attention was given to the possibilities that XBRL reporting could offer – digitization, increased comparability and reliability to name a few. However, it’s equally true that the awareness of XBRL and its benefits has fallen away in recent years, as businesses, regulators, banks, and governments alike have simply become used to the presence of the reporting technology.
While it’s without question that XBRL US reporting is here to stay, there are some within the industry that argue that more can be done with XBRL technology to improve reporting and data analysis. In a recent podcast on the Business Learning Institute, John Turner, the CEO of XBRL International, was put under the microphone to discuss what XBRL is, how it’s used today, and what the future of XBRL looks like.
Below is a summary of some of the lesser-known facts that John mentioned during his interview.
There’s more to XBRL reporting in the US than the SEC.
The Potential of XBRL US Reporting
With the recent vote to mandate iXBRL, more and more people are being aware of the SEC’s adoption to the XBRL reporting.
However, XBRL has a wider potential for use in the US. A project in Florida, for example, is one way XBRL International is looking at the applications of XBRL within the US; emphasizing the benefits of digitizing reports to help improve transparency and decision making while granting municipal bonds.
Comparability could improve
One of the main benefits of XBRL reporting is the fact that it standardizes information, so long as the filers use the same accounting standard. This standardization allows for greater comparability, which is great for business analysts, investors, and any other invested stakeholder in a business.
However, where XBRL falls short is that it does not improve the comparability of information between reports that are prepared using different taxonomies. As a result, XBRL does not necessarily make it any easier to compare and analyze financial statements when, for example, one set of financial statements have been prepared under IFRS taxonomy and another has used US GAAP taxonomy.
XBRL International is aware of this divergence and is actively looking into ways to improve comparability across different taxonomies. Once this has been achieved, one can expect even more transparency, comparability, and trust between businesses on an international level.
Compliance costs could be reduced
During the interview, John Turner mentioned that one of the areas XBRL International is turning its attention on is the space of compliance, and more specifically the high costs that businesses often face due to increased regulation, either domestically or internationally.
One of the key reasons why costs can be so high is the fact that regulatory frameworks may be broadly similar across jurisdictions, for instance, financial reporting regulations in America and Europe, but there are still differences that need to be respected. As a result, the cost of compliance with different jurisdictions’ regulations can be especially punitive for international businesses.
Although costs can be brought down by further communication, for example between industry bodies and regulators, there is still more work required in this area. And, given such conditions, the likelihood of XBRL International to focus on ‘cost reductions’ in the coming years will indeed grow.
DataTracks is a member of XBRL International and specializes in compliance reporting and regulatory solutions. To find out more how we can help you, please email us on email@example.com or visit our website – www.datatracks.com.