CGF Research Institute (Pty) Ltd
 

Organisational perspectives of the benefits of XBRL

XBRL stands for eXtensible Business Reporting Language, which is becoming the de facto worldwide standard for the publishing, exchange and analysis of business and financial data. Business and financial data prepared according to the XBRL standard can be consumed globally, no matter from where it originates or where it is used.

 

South African Institute of Chartered Accountants (SAICA)

Graham Terry, vice president of The South African Institute of Chartered Accountants (SAICA) and acting chairman of XBRL South Africa enumerated some of the benefits of using XBRL as:

  • Faster ability to communicate financial information to the markets;
  • Increased transparency;
  • Cost savings in distributing information externally and internally in the organisation;
  • New business opportunities through membership of XBRL South Africa;
  • Better ability to compare, aggregate and analyze business information; and
  • Providers of business information can leverage a single file for reporting to various external bodies, rather than creating different versions for each party.

 

Said Graham Terry: "Large international organisations like 3M, General Motors and Microsoft use XBRL to file to the SEC. In the Netherlands, their government believes that about EUR350million for the private sector will be saved in administration burden through the speed and efficiency of using XBRL for financial reporting. The reality is that using this standard will, very soon, not be an option. I urge corporate and financial business decision makers to positively consider becoming members of XBRL SA."

 

JSE Limited

“XBRL is a business reporting language that offers cost savings, greater efficiencies, improved accuracy and reliability,” said the JSE’s CEO, Russell Loubser at the recent launch of XBRL South Africa. Introducing a better way for companies to report their figures was of great importance to the JSE, he said.
Freda Evans, the CFO, further commented, “A business reporting language that offers “cost savings, greater efficiency and improved accuracy and reliability” of company financial information is of great interest to the JSE – both in our role as regulator of listed companies and as a recently listed company whose profitability is at least partly dependent on the ability of investors to accurately and efficiently analyse company information. We have joined the XBRL initiative for this reason and because, by creating a taxonomy for the JSE listings requirements, compliance (or non-compliance) will be easier to ascertain and to correct/improve. In the interests of making as much information available as possible, the JSE will be encouraging participation in the initiative but will not be mandating the use thereof for the foreseeable future. We believe the benefits discovered by users of XBRL will drive increased usage and that, hopefully, mandating will not be necessary. The JSE is currently assisting with the introduction of what XBRL can do for National Treasury and SARS in the hope that they will then start to drive the use of XBRL as a means to efficiently and quickly submit information as well as facilitating the use thereof by regulators and government bodies. Perhaps Government will see the benefits of using XBRL for their own reporting!”

 

Large Accounting Firms

As part of the Global Public Policy Symposium in Paris, held on the 8th November 2006 and attended by key players concerned with ensuring the quality and reliability of financial reporting worldwide, the Chief Executive Officers (CEOs) of PricewaterhouseCoopers (PwC) International, Grant Thornton International, Deloitte, KPMG International, Grant Thornton International and Ernst & Young, published a joint statement of their vision of what the future might hold for financial reporting and the accounting profession. Entitled “Global Capital Markets and the Global Economy: A Vision from the CEOs of the International Audit Networks,” the document envisions investors having access to real time company financial information through XBRL, financial statements that go beyond reporting past performance to projecting future performance based on information about business intangibles that are not currently measured, and a recommendation that companies choose to supplement regular audits with periodic forensic audits.

 

The paper looks forward to a world “where users increasingly will want to customize the information they receive” in which “the process for recording and classifying business information will be as important, if not more important, than the static formats in which today’s financial information is reported. Our jobs as auditors must therefore change to increasing focus on those business processes.”
An “important enabler” of future reporting will be the Global XBRL Initiative, the paper says. XBRL users will be able to view company data in any language, any currency and under different accounting systems and get immediate answers to queries. “In fact the new world is already here for the approximately 40,000 companies that already use XBRL to input their data. . . . China, Spain, the Netherlands and the United Kingdom have required companies to use XBRL.”

 

CGF Research Institute (Pty) Ltd (www.cgf.co.za)
CGF Research Institute will be covering the topic of XBRL in January 2007, addressing the importance of standardised reporting, including the use of technology which further enables companies to report upon its business and financial activities.

 


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