More than 50 percent of analysts
remain unaware of XBRL (eXtensible Business Reporting Language),
despite a growing number of jurisdictions mandating the use of the
electronic tagging system, according to a survey by the CFA
Institute.
XBRL provides identifying tags for individual
items of data within financial reports. The tags enable automated
processing of business information by computer software. XBRL is
developed by an international nonprofit consortium of about 450
major companies, organisations and government agencies. It is an
open standard, free of licence fees.
Proponents say XBRL will make it easier for
companies to prepare, file and publish statutory information, and
easier for investors to access this information.
Many governments around the world seem to
agree. Companies listed in the US that use US GAAP and have a
worldwide public float of more than $5 billion must file in XBRL
from financial years ending after 15 June 2009. All US listed
companies must file in XBRL from 15 June 2011.
Other examples include Japan, where XBRL has
been widely used since 2008, and the UK, where the government plans
to make the system mandatory for all company tax returns due after
March next year.
However, critics have warned that XBRL it is
not the panacea to all financial reporting ills.
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By GlobalDataJPMorgan Cazenove head of accounting and
valuation research Peter Elwin told The Accountant earlier
this year that investors may not have engaged with XBRL at all
yet.
The latest CFA Institute member survey seems
to back Elwin’s claim.
CFA Institute members are primarily investment
professionals. Of the almost 1,500 respondents to the October
survey, 55 percent were not aware of XBRL. This was down slightly
from 59 percent in 2007.
Just 11 percent of respondents were aware of
both XBRL and plans for its use in financial reporting in their
jurisdiction, up slightly from 9 percent in 2007.
In the US, where XBRL is already mandatory for
the largest listed companies, 48 percent were still unaware of
XBRL. Just over half the respondents to the survey were from the
US.
UK concerns
The UK Accounting Standards Board
(ASB) remains mindful of government plans for XBRL as it consults
on the future of UK GAAP.
The ASB recently proposed to replace UK GAAP
with a three-tier reporting system comprised of IFRS for listed
companies, Financial Reporting Standards for Smaller Entities for
the very smallest companies and IFRS for SMEs for everything in
between.
ASB chairman Ian Mackintosh told The
Accountant the ASB has heard concerns that companies will need
to file under XBRL before UK GAAP changes, then be forced to
convert to another system.
The ASB has recognised it has a lot to discuss
regarding XBRL, including identifying how tagging is done and who
does the tagging.
Mackintosh said it is not clear to him who
creates XBRL tags for UK GAAP.
“We just need a bit more clarity and
understanding of what’s going on,” he said.
Carolyn Canham and Ana
Gyorkos
