Every now and then I like to revisit Rivet’s XBRL journey mantra - Comply. Control. Communicate. – to remind ourselves that we are really only at stage 1 of the XBRL journey and there is a long way to go.
comply-control-communicate
We regard the XBRL journey as having three stages: Comply, Control, and Communicate. If you accept the premise that corporate reporting is essentially about communication, then after more than a decade since XBRL was ‘invented’ we are still at stage one. The few (but growing number) of organizations subject to mandated reporting in XBRL are communicating a relatively limited set of information, mostly financial in nature, that is of interest to a limited number of people.
Stage 2 – Control – refers to the use of XBRL internally within an organization or within closely co-operating industry peer groups, to get better control over the reliability and comparability of data by using XBRL as the basis for a collaborative data standard. Few, if any organizations, are even dabbling with this now. Stage 2 essentially says ‘If you are spending the time and money to tag your data for regulatory reporting why not get some benefit from this effort within your organization?’.
Stage 3 – Communicate – refers to the pervasive use of multiple XBRL taxonomies to communicate a wide range of financial and non-financial data to produce the kind of holistic reports that communicate organization performance and behaviour to the widest range of stakeholders. It depends on a wide range of XBRL taxomonies being available, for all kinds of data, and global organizations making use of many of them at once. Yikes!
Let’s face it. The value add at stage 1 is minimal. Currently regulators benefit more than the organizations doing the reporting. But as long as regulators make the data available to the cloud-crowd, as the U.S. S.E.C. does for example, we are bound to see the value add rise as innovation delivers new kinds of analytic apps that can the leverage the growing online availability of XBRL data.
Stage 2 is going to be hard. Most organizations are wedded to spreadsheet anarchy and heavily invested in non-taxonomy-aware reporting software, neither of which are suitable for reporting based on a data standard like XBRL. Turning that tanker around is going to be hard and it may hit an iceberg first if ERP vendors don’t adopt XBRL tagging at the transaction level. Take up of XBRL-GL for example has proved a hard sell.
Stage 3 is some way off. The majority of XBRL taxonomies are financially-focused and there’s a lot more to report about an organization than just financial data. There are a few fledgling non-financial XBRL taxonomies (like the GRI’s for example) but not enough to make this stage even viable let alone value-adding.
So we have a long way to go.
But if you believe in the destination, maximum communication of organizational information to the widest range of stakeholders, then the journey has to be worth the effort.
Pingback: Tweets that mention Comply. Control. Communicate. | Rivet Software -- Topsy.com