The recent XBRL US Pacific Rim Technology Workshop in Santa Clara, CA resulted in some interesting key findings that are worth commenting on while we wait for the official discussion paper to be published.
- XBRL US, XBRL Japan and the IASB are working together to bring convergence to public company reporting taxonomies for Japan’s EDINET, US GAAP and IFRS, through an ongoing evaluation of architecture, content, and the development and maintenance approach.
Convergence is not just about converging taxonomies. Convergence is also about ensuring that a new financial ecosystem really does emerge rather than a rag-bag of independent country-specific information silos focused on tax reporting, company reporting, environmental reporting etc. What this suggests is that there is a need for countries to embrace the idea that for true transparency, their many domain-specific regulatory bodies could use a single body that manages the ‘umbrella’ reporting channel for all corporate financial information.
- Many companies in the US have begun filing per the mandate by the Securities and Exchange Commission (SEC), with fewer extensions and better data quality than expected
A language called ‘eXtensible’ must in fact be extensible to deliver the flexibility required to suit a broad range of business needs but in practice extensions are a killer for data standardization and for comparing like-for-like. So it’s good news that even the limited number of SEC filings so far contain fewer extensions than expected.
- Maintaining taxonomies requires constant review, evaluation and change by all users to ensure high-quality, consistent data; the maintenance process in Japan and the US were compared and contrasted
That’s why it’s essential that taxonomies are centrally managed by the regulatory owner and easily accessible through open web services so software developers and anyone else who wants to consume the taxonomy can do so relatively easily and with confidence that it’s a ‘gold’ copy.
- XBRL could give companies the tool to create trusted content for use in social networks serving investors and analysts. Ensuring that XBRL content is discoverable, shareable, easily rendered and connected to the source document will drive the consistent and accurate re-use of financial information across the web
It won’t be long before adding an XBRL widget to your corporate blog or website will be as common as adding a Fans box to your corporate Facebook page. Information thrives on dissemination and for XBRL to move from being a relatively closed clique to gaining a lot more ‘friends’ and ‘followers’ out in the real world, it needs widgets.
- XBRL was cited as an important gauge to measure social investing returns needed by all types of investors, ranging from philanthropic, who need to understand the social impact of programs in which they invest, to market investors that are looking for financial return
Corporate footprint and impact is a key concern of socially conscious investors. XBRL has an opportunity to lead in this area: Not just by determining an appropriate set of ‘impact metrics’ and a taxonomy to report them but also to give corporate impact reporting the same emphasis as financial reporting as a ’stream’ in the corporate information reporting channel. It’s over a decade since Kaplan and Norton introduced their concept of a ‘balanced’ scorecard, now XBRL can help create some kind of Lovelock-influenced corporate ‘Gaia’ scorecard.
We’re looking forward to reading these comments discussed more fully in the future paper to be published by XBRL US.
Tags: XBRL
