Digital Revolution in Compliance Reporting

Computers revolutionised the world of information decades ago. ‘Interactivity’, however has been a more recent phenomenon. Hitherto, data collection by Regulators has always been in ‘non-interactive’ formats like PDF, Word, etc. This scenario is changing as we go to press. Regulators worldwide are now focused on collecting data/reports in ‘interactive’ formats such as XML, XBRL, etc.  A layman wonders what the difference between these formats is and what the advantages of interactive format are. Here is a ready reckoner:

 Non-interactive formatInteractive formatAdvantage / Impact
File formatsExamples are .PDF, .doc, .docx, .xls, .xlsx, .html.XML, .XBRL, .XSDAdvanced file format
Data consumptionHuman readableComputer readableComputer query-able data
Data searchManual through print or display on computersProgrammable; instantaneous.Saves time, avoids manual errors
PreparationMostly through word processors and spreadsheetsThrough specialist software and TaxonomiesNeeds specialised preparation
Data validationModerateVery highReliable data

Advantages of Digital Revolution

It is evident that ‘interactive data’ format has its advantages in terms of:

–          Data reliability

–          Instantaneous querying nature

–          Data comparability across peers, across periods

–          Data archiving in unified format

–          Transparency in reporting

XBRL Challenges

XBRL format seem to be the ONLY global choice, at least at the moment. It has its own challenges in generating this report. One needs to have the specialised software, knowledge of the taxonomy (dictionary of accounting terms) and the ability to troubleshoot validation errors.

XBRL Solutions

The following solutions are available to a compliance officer for XBRL reporting:

Generate in-house

For this, it is highly recommended that team involved in preparing XBRL reportsundergo training to have a basic understanding of this technology.

Company is also expected to purchase an XBRL software (if it is not provided free of cost by the Regulator)

Accountants should spend time in manually tagging each meta-data within the financial report. This is the most crucial part as it requires careful selection of accounting concepts from the list in the taxonomy.

Rely on your Accounting / Auditing / Secretary Firms

No doubt they will get this job done, but at a very high price tag and at a time period convenient to them.

Outsource XBRL work to service providers

Here, you simply forward your final version of the Accounts. Such XBRL service providers would tag each meta-data in your Accounts and return the validated XBRL file to you. Their cost could surprise you as it usually tends to be just a fraction of what your Accountants would typically charge.

To find out more about DataTracks, send an email to enquiry@datatracks.com.sg

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