Importance of XBRL Implementation
XBRL (eXtensible Business Reporting Language), as we all know it, is a globally accepted standard for exchanging business information. From the Regulator’s perspective, it is an interactive data format as against the merely readable formats like HTML, PDF etc., that provides the consumers of reports with insights rather than just information. Having said this, XBRL has to be “rightly implemented” not just “mandated” for it to be effective and beneficial to both Regulators (in terms of enhanced adherence from Filers and quick consumption of data) and Filers (in terms of cost and ease of reporting). This is because every regulation, region, filing entities’ segment and reportable dataset is different. Implementing XBRL in the same style will either increase the cost and burden of reporting on the Filers, or render the available data inadequate to draw up the necessary insight.
The Impact of XBRL Implementation on various Financial Regulators:
Though XBRL is an effective and proven medium to consume data efficiently, it must be implemented appropriately immediately. Let’s look at a couple of implementations that were properly done and have been successful since.
- ACRA in Singapore: Public / Private Companies incorporated in Singapore have been required by ACRA to file their financial statements in XBRL format since 2014. In order to make it acceptable by the Filers, ACRA has released a free XBRL utility for converting the financial statements into XBRL format. Though selecting the appropriate XBRL tag against the fact reported requires an accounting perspective, availability of the free tool to do this has reduced the cost of conversion at the Filers side. This has significantly increased the adherence level of this mandate. ACRA has also announced a subsidy for accounting software vendors to develop an XBRL module to generate XBRL report straight through the Filer’s accounting software.
- HMRC in UK: Business entities are filing financial statements and tax computations in iXBRL format since 2011. HMRC, instead of requiring the Filers to file an additional report in XBRL format, required them to submit the same HTML document but with XBRL tags embedded inline. From the Filers’ perspective, this has been accepted well as they did not’ have to change their reporting style and there was no worry about inconsistency between reportable data since there is only one document to be filed. On top of this, there was also a free tool provided by HMRC for Micro-entities fulfilling certain conditions. From the Regulator’s side, they are collecting the same report but the important dataset in the report tagged in XBRL enables them to do quick and better analysis.
The above examples are not intended as an exhaustive analysis, butmore of an illuminating overview of a couple of XBRL implementations worldwide. The premise being, if rightly implemented and considering various factors, XBRL can make an effective and efficient contribution to the compliance reporting space.
About DataTracks: DTracks Limited is a subsidiary of DataTracks Services Limited. With more than 10 years track record, DataTracks is a global leader in preparation of financial statements in XBRL and iXBRL formats for filing with regulators. 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, ACRA in Singapore and MCA in India.
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