XBRL “ Beyond Financial Reporting (Part I)
XBRL was developed by a team at the American Institute of CPAs (AICPA) that was to eventually become XBRL International. The full story is a fascinating read and can be found here. The team conceptualized XBRL as a business reporting data standard, but they ended up making something far more powerful. So, although XBRL is currently overwhelmingly used for financial reporting, it is, in reality, an under-used technology.
In a two-part blog, we discuss eight Â reporting instances where XBRLs versatility has effectively showcased. These serve as great precedents to what is, hopefully, a much broader use of XBRL in the immediate future.
XBRL used for Medical Sector
Medicine is a huge subject of study and the International Statistical Classification of Diseases and Related Health Problems (ICD) of the WHO is regularly updated. The latest update was the 10th revision. ICD-10 contains codes for diseases, signs and symptoms, abnormal findings, complaints, social circumstances, and external causes of injury or diseases.
These medical codes are then used for a diverse range of activities such as:
- Data and statistics pertaining to medical conditions
- Surveillance of epidemic or pandemic outbreaks
- Billing for services rendered
- Determination of insurance premiums
Capturing these data in XBRL can streamline and automate all processes that use this ICD-10 encoding. Using XBRL as data standard can benefit the medical sector in many other ways as well:
- Standalone Intellectual property
- Multi-language support
- Automated code search tools
XBRL used for Energy, Transportation and Construction sector disclosures:
The companies specifically in Energy, Transportation and Construction sector have to disclose the financial data transactions in the surety bonds. Surety bond is a three-party agreement by which the surety (insurer) binds itself to discharge the contracted obligations of a principal (contractor) to an obligee (owner) in the event that the principal fails to fulfill such obligations. Currently the processing of the surety bonds involves lot of paper work, significant amount of manual rekeying into the system by the agents. The processing of these contracts is critical, complex and as of now completely manual and results in favoring of large contractors over small ones because of the lower return on small contractors projects. Transforming the process through the XBRL data standard would make data immediately computer-readable, more accurate and timely, providing cost effective benefit to large and small companies.
XBRL US in collaboration with Department of Energy (DOE) has formed a new working group covering the Construction, Energy and Transportation (CET) industries. The CET taxonomy is being developed and XBRL US is conducting the pilot project to demonstrate how data standards can benefit the surety bond processing.
XBRL used for disclosure of Corporate Actions:
Publicly traded companies have to record and disclose all events that bring material change to a company and affect its stakeholders such as stock splits, dividends, mergers and acquisitions, rights issues and spin offs, etc. Currently the corporate action announcements arrive in various forms and format such as fax, emails and press releases, with issuers using different terms to describe the same events. These messages pass through various intermediaries, including agents and custodians, before reaching the investor. Transforming the current processing of the data to XBRL format will standardize and streamline the processingÂ of corporate actions and provide an efficient, cost-effective platform that benefits all market participants.
XBRL used for Sustainability Reporting (Environmental and Societal Impact Reporting):
With climate change becoming more and more apparent, and with the line between responsible use of natural resources and exploitation of those resources getting thinner, societies have become much more cognizant of the threats that some corporate activities pose to the natural environment. The idea of the triple bottomline (People Planet Profit) has taken hold. A large number of companies have started disclosing a lot of sustainability data.
Companies such as Coca Cola, Heineken and Caterpillar publish large sustainability reports. A large number of general and industry-specific standards exist for such reporting. The CDP (and its associated CDSB), the GRI are widely accepted standards. They are, of course, reporting standards. GRI has a taxonomy that is available publicly. Another organization that is looking to use XBRL in sustainability reporting is SASB in the US. A European law mandating some large companies to disclose sustainability information also looks promising.
In Part II, we cover four more applications of XBRL.
How DataTracks can help you?
DataTracks is a global leader in the preparation of financial statements in XBRL and iXBRL formats for filing with regulators. We also provide Software (SaaS) and Template solutions for those who would like to convert XBRL files themselves. DataTracks prepares more than 12,000 XBRL statements annually for filing with regulators such as SEC in the United States, HMRC in the United Kingdom, Revenue in Ireland and MCA in India. DataTracks provides world-class services with its team of certified accountants experienced in US GAAP, UK GAAP, India GAAP and IFRS.
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