Meetings around XBRL and iXBRL can quickly become quite parochial. XBRL is not quite as standardised at it seems. It was these differences that were at the forefront of discussions at the recent launch of “Report Authority”, a new global XBRL authoring and compliance tool unveiled to an eager audience in London. But as businesses around the globe grapple with the early years of mandatory XBRL or iXBRL how prepared are they to deal with multiple jurisdictions? Gary Simon, FSN’s managing editor reports from the Report Authority event attended by UK regulators (HMRC and Companies House) as well as Deloitte’s Joseph MacDonald.
There is no denying that XBRL is becoming a global standard but as Joseph MacDonald was keen to point out there are significant differences in the adoption rates of XBRL in different countries and in the precise regulatory requirements. For the unwary this is set to create significant complexity.
In broad terms the uptake of XBRL has been impressive. Great swathes of the world’s developed and emerging economies have taken XBRL to heart. But many of these countries are working to a different timetable for adoption and to some extent this has masked both the differences in their standards and the lack of publicly available software conversion and tagging tools that are can accommodate the variety of standards.
Most businesses have been concerned about local requirements with few taking a global perspective of the software tools they will need in the future and the quality of support and knowledge that they will require from their vendors.
Early indications are that many companies on both sides of the Atlantic are struggling to comply with XBRL requirements. Error rates in XBRL submissions remain high and many companies are unhappy with the costs, errors and time delays involved in outsourcing their XBRL to third parties. And the stakes are getting higher.
In the United States the June 2012 quarter marked the final step of mandatory XBRL reporting which required approximately 6,500 accelerated, non-accelerated and smaller reporting company filers to join the accelerated filers already submitting detailed XBRL reports.
In the United Kingdom, the initial period of leniency in regard to iXBRL filings will draw to a close and although the HMRC is not extending the minimum tagging list for 2013, it will take a tougher line on the accuracy of filings now that companies have had a couple of years to get accustomed to the process.
One consequence of early year challenges is that many businesses have decided to bring their XBRL tagging process in-house rather than rely on financial printers, auditors and other tagging operations. But many of the in-house tools focus on local XBRL requirements. For example, tools focussing on SEC filings may have difficulty with iXBRL in the UK or indeed, more recently, with iXBRL in Denmark.
And there are significant differences. The UK standard, “in-line XBRL” (iXBRL) presents the information in two ‘electronic skins’, i.e. the machine readable syntax of XBRL and the human readable version. Thus readers and users of iXBRL can be sure of the integrity of the information since there is no difference between a set of accounts in human readable form and its underlying XBRL. On the other hand XBRL for US filings is simply a stream of XBRL code and completely unintelligible to the untutored eye. Furthermore, the US standard requires taxonomy extensions whereas the UK standard does not.
In practice this means that an in-house tool needs to accommodate these differences in approach and be able to cope with a growing variety of taxonomies and regulator imposed business rules.
But the in-house solution has to be something of a workhorse as well. For example, in the UK, a group may have to produce tens, if not hundreds of sets of accounts at a time and so the ease with which accounts can be tagged, templated and re-used from year to year becomes critical if the finance function is not to become bogged down in administration.
Report Authority prides itself on the ability to generate multiple sets of accounts efficiently and be able to comply with multiple jurisdictions. Galliford Try, for example, used the solution to address requirements of multiple subsidiaries and required approximately 40 sets to be submitted to HMRC within 2 months. They used Report Authority to convert their accounts and successfully submitted them all within the required deadline and with no errors. From this submission they have been able to create generic templates to prepare the accounts for next year.
Galliford Try’s Group Chief Accountant said effusively, “In little over a month AMOSCA, using Report Authority, enabled us to file over 40 sets of accounts in iXBRL format for HMRC reporting purposes. This would not have been possible using the tool we had initially set out to use.”
However, tool selection should be more than an examination of features and functions. Ease of deployment is a major consideration, especially when organizations want to decentralise the preparation of XBRL accounts and cede responsibility to local reporting units. The vendor’s XBRL skills are also becoming a key differentiator in supporting organizations through the transition and enabling them to become self-sufficient in a multi-jurisdictional environment.
Mandatory XBRL is becoming commonplace around the globe yet many businesses have not yet settled on a permanent solution. Globalisation of XBRL adds a new dimension to the problem but it seems that very few businesses and software vendors have woken up to this pressing challenge.