EXtensible Business Reporting Language (XBRL)
As global accounting standards have started to converge, businesses are increasingly being required to understand and adopt XBRL as an enabling technology in enterprise wide disclosure initiatives being mandated by global financial governing bodies, such as the SEC’s Final Rule in the US and HMRC in the UK.
Executing any company IT strategy requires knowledge, foresight and careful planning and XBRL is no exception. Companies that have completed XBRL implementation and filed successfully know that it involves the transformation of the reporting processes — migrating reporting processes designed with presentation-centered,
paper-based objectives to one which ignores form and is entirely electronic and data-centric.
So how does a company begin the time-intensive task of preparing to file in XBRL, which starts well before the filing event and continues thereafter? The first step is to be aware of the challenges and issues:
- Educate your financial team about XBRL
- Avoid rework and risk by planning your implementation approach
- Process impacts should be considered. Be aware that upstream of XBRL there will be organizational processes change.
- Assemble cross-functional teams across the technology, accounting and finance
- Be aware that the time cost, and manual steps to produce XBRL statements often exceeds what regulators and preparers anticipated
- Do not underestimate data architecture including
meta datato enable XBRL and the maintenance to keep the XBRL reporting machine humming
- XBRL isn’t human–readable. Be aware that there are different approaches to making the data readable and enabling visualization.
- Allow time to map data to tags, or
taxonomiesto enable useful reporting
- Allow time for an internal walk through, to test the accuracy and completeness of the data in XBRL
- Build change into your plan. Tags built today will need to be edited and extended tomorrow as rules changes and your understanding of the data changes.
- File voluntarily to get XBRL right
- Caveats – current regulatory rules do not require independent auditor assurance on XBRL submissions