XBRL has become the leading technology in the world for digital reporting. It is required by more than 100 regulators in 70 countries, including the SEC, which last year implemented requirements for foreign private issuers to file their reports in XBRL. That was a significant requirement for all FPIs around the world using the IFRS accounting standards. This includes over 300 companies in Canada, most of its largest companies.
In the EU, the ESEF requirement takes effect in 2020. That requirement calls for the use of XHTML combined with iXBRL to present reports. All EU Companies will be required to follow this approach. In the UK, iXBRL is already required by the tax authority and some 2300 companies must comply. Also, over 2000 companies file their reports in iXBRL with Companies house, the national companies registry.
The deep dive report was triggered by the forthcoming advent of ESEF and a recognition that preparation is required to make it work properly.
The movements of the US, UK and others towards digital reporting point to the fact that a world where corporate reporting is based on paper is rapidly coming to a close. In an increasingly digital world, where companies are engaged in digital transformation at all levels, the expectation of a continuance of paper based reporting is absurd. Paper reports will survive for some time, but they will be secondary reports, expensive relics of the past.
The deep dive report fully supports the power of XBRL and contains several important suggestions, including:
- for regulators to work together to align reporting requirements and thereby reduce reporting burden.
- for executives and Boards to ensure that suitable governance is in place so that digital reports meet the needs of users. Companies need to have appropriate processes and procedures in place to manage disclosure in a digital age.
- for users to familiarise themselves with Inline XBRl and structured financial statements, to ensure that they can maximise the benefit that digital disclosure of fundamental data can deliver.
- for software vendors to work to educate the market and to continue to innovate in the delivery of high quality software that is easier, more intuitive and more accessible for the preparer community.