Exchange testing XML variant

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The emerging XML-based standard isn’t widespread in Canada, but in deploying Extensible Business Reporting Language (XBRL) across its operations, Toronto-based TSX Group — a holding company for the Toronto Stock Exchange and TSX Venture Exchange — says it’s taking a step forward in ensuring that XBRL will be the future of business reporting.

“We acknowledge that it’s early, but anything we can do that will help our investors, shareholders or analysts access our financial information, is the step that we’re going to take,” said Michael Ptasznik, chief financial officer, TSX Group.

XBRL is an electronic tagging format, developer a few years ago, that enables an automatic exchange of financial information across all software and computing platforms. The XML data tags describe financial information, including such things as financial statements, balance sheets, income statements, accounting and tax reports, enabling consumers of businesses information to analyze data coming from different sources.

Typically, financial institutions publish their results on the Web in PDF format. People who want access to that information would then retype the data into their own spreadsheats, Ptasznik said.

“Once the XBRL technology is adapted, our investors and analysts will be able to access the information and download it directly, without having to retype it,” Ptasznik said, making it easier to analyze TSX’s information and its statements.

Right now, the adoption rate has been a thorn in the side of the standard.

Until the standard is more widely accepted, Ptasznik said his company will continue to issue reports on its Web site, keeping in pace with how other organizations report information. Being able to offer data via XBRL is a bonus, for those that want to access it, he noted.

David Senf, analyst at IDC Canada Ltd. in Toronto, said having accounting and financial reporting data available in a standardized XML format helps reduce the costs of integrating and reusing that data.

While it has been slow to catch on so far, Senf said the speed of adoption is par for the course when dealing with any new standard.

He explained that the accounting community had to agree on the taxonomies that would be used and how financial data would be represented in XML and then, “there’s a chicken and egg issue around adoption.”

“So, it’s important that corporations like the TSX take a leadership role to break the chicken and egg standoff. Moreover, once organizations begin to realize the cost and reusability benefits of XBRL, adoption will pick up quickly.”

The other factor, Senf said, is that as the vendor community, including Microsoft Corp. and Oracle Corp. support XBRL, it will spark greater adoption.

Tony Pedari, partner, PricewaterhouseCoopers (PwC), global risk management solutions in Toronto, said the ability to increases the transparency of the information by allowing users to have instant access and reuse of the information is beneficial.

PwC helped the TSX group to implement the XBRL tags, and has been involved for the past two years with XBRL Canada — a non-profit consortium of Canadian companies working to create and maintain XBRL taxonomies based on Canadian reporting standards.

It took about a week to work with the staff at the TSX Group and to prepare the statements in the correct format, Pedari said.

In the works right now in Canada is the development of, what Pedari refers to as a data dictionary or the road mapping of various components into the XBRL language. For example, the Canadian XBRL organization is working on a taxonomy for general principals of accounting (GAP), by taking the Canadian rules associated with accounting and mapping them into a standard. Creating these taxonomies will help promote the adoption of XBRL in Canada, Pedari said.

For now, in Canada, financial reporting is not regulated, but as the concerns about the disclosure of financial information increases in Canada and the rest of the World, Pedari says regulations will play a more central role.

“There’s a lot of information to consume and you have to look at the best way to consume that information,” he said. “You have to consider how you are going to deal with this increased appetite for information, and the quality of financial reporting, in a cost effective manner.”

The TSX is only using XBRL for external company docuemnts, but Ptaszik said it is considering branching into adopting it internally as well.

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