Just as Canadian enterprises start to file their financial statements in extensible business reporting language, an international consortium is reporting even greater progress in other parts of the world.
Representatives from the U.S. Securities and Exchange Commission (SEC) and other regulators are gathering in Munich, Germany this week for an annual conference focused on extensible business reporting language (XRBL), which came out of an industry consortium more than five years ago to create a standard for financial reporting. Based on extensible markup language (XML), XBRL uses metatags to more effectively share, analyze and publish information.
XBRL is already gaining momentum in the United States, in part because of a mandate from the Federal Deposit Insurance Corp. (FDIC) that all banks submit call reports with it. A few years ago the Toronto Stock Exchange set the stage for Canadian adoption by publishing its year-end results using the standard. More than 40 Canadian organizations, including Royal Bank, Public Works and Government Services Canada and PricewaterhouseCoopers have joined a Canadian chapter of the XBRL consortium.
In a conference call from the event in Munich, Michelle Savage, vice-president of XBRL U.S., Inc., said the government has been providing considerable funding for a project to revamp its EDGAR system used by millions of investors, analysts and reporters to better understand the financial condition of public companies worldwide. Using XBRL will eliminate a lot of the manual work done in EDGAR today, Savage said.
“The end result is that database will become an interactive system,” she said. “It will become much more useful for investors.”
A second funding project is to build out taxonomies – a sort of dictionary of accounting terms – so that every company can file primary financial statements in XBRL.
Brigitte Lippmann, co-lead of an SEC task force that’s looking at new ways to tag financial data, said the regulator has held three roundtables so far to educate people in the financial market and assess the needs and desires of investors and analysts regarding the language. It has also created an XBRL “viewer,” at SEC.gov that allows anyone to look at XBRL data, which is usually only processed by machines, human-readable formats.
“It will offer graphing and other things like that,” she said. “We’re really hoping the software marketplace uses that and builds upon it.” Gerald Trites, project director for XBRL Canada, told ComputerWorld Canada the Canadian Securities Administrators (CSA) launched a voluntary filing program last month and has held information sessions on how to get started. He said the CSA is also going to update SEDAR, Canada’s filing system, to accommodate XBRL.
“The SEC in the U.S. has been running a voluntary program for about a year and a half now. Our program is somewhat similar to theirs. They’ve been putting an awful lot of effort in the U.S.,” he said. “We’re moving from end reports and quarterly reports to reporting on the Web sites.” Mike Bartell, the FDIC’s CIO, said since it began mandating XBRL, 100 per cent of bank filings met the requirements for mathematical quality, compared to only about 70 per cent of the data in the previous system. Banks are also filing in hours rather than weeks later.
“It’s been much easier to use,” he said, adding that analysts can cover 20 per cent more banks than they could before. “As an organization where staffing is static if not shrinking, that’s huge for us.”