XBRL Continues to Make Waves
eXtensible Business Reporting Language, or XBRL for short, is an XML-based global data standard that has changed the way that organizations share their business and financial data.
We’ve previously discussed the importance of XBRL implementation, which you can read about here. In spite of XBRL’s long history, it continues to be a game-changer in how businesses and institutions alike report and analyze financial data.
The benefits of XBRL are undeniable
XBRL reporting allows companies as well as people reading financial reports to better interpret financial and business information, whilst also collating such information in an efficient and cost-effective way.
As an international standard, XBRL helps improve reporting within and across businesses, regulators, governments, and other institutions by presenting digital information in an easily digestible way. Further, the use of IFRS taxonomy means that the users of those reports can take for granted the accuracy of the information, as all income, expenses, assets, and liabilities are sufficiently accounted and provided for.
Although certain authorities – such as HMRC in the UK and ACRA in Singapore – currently require companies to file either their financial statements or tax returns in XBRL or iXBRL format, the use of XBRL does not just extend to reporting to government authorities. In fact, many private companies are now using XBRL within their own businesses, and in time XBRL use could widen to include reporting to potential investors and analysts, as well as business stakeholders.
XBRL can revolutionize the business landscape
The advantage XBRL has is that it can be applied to all areas of finance and business. Not only does XBRL facilitate internal and external financial reporting for companies, but it also permits businesses to communicate their financial reports with tax authorities and other institutions.
So it’s no surprise that XBRL reporting is used in over 50 countries and that a number of public and private bodies have adopted XBRL or iXBRL, from the Danish Business Authority and the Japan Financial Services Agency to the Colombian Business Registrar, and the Mexican Securities Regulation, to name a few.
Since 15 December 2017, all Foreign Private Issuers (FPIs) that use IFRS taxonomy have been required to use XBRL tagging when filing with the U.S. Securities and Exchange Commission. This move not only reduces the need to file duplicate documents with different U.S. institutions but also highlights the continued role that XBRL plays in shaping today’s business landscape, and it’s unlikely that this role will diminish anytime soon.
Overall, the implications of XBRL are enormous. Its adoption by numerous institutions around the world is evidence of the growing belief that XBRL is the future in business reporting, analysis, and communication. Indeed, the European Securities and Markets Authority (ESMA) has announced that from 2020, iXBRL reporting will be required for public companies that submit consolidated IFRS accounts, and ESMA is just one further institution to make the move to XBRL.
XBRL represents the future of how companies, institutions, and regulators will communicate with each other, and the new ways in which to analyze and compare data. With blockchain based data representation and AI-based data tagging coming up, it’s likely that XBRL will become an increasingly important aspect of a business, in both regulatory compliance as well as investment analytics, stay tuned!
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