Countries like the US and Japan will not adopt IFRS because technology will render convergence unnecessary before it is complete, according to XBRL expert Kurt Ramin.
Ramin is an adviser to the International Accounting Standards Committee Foundation’s XBRL team and led the organisation’s work with XBRL International in 2005 when he served on the XBRL International Steering Committee.
XBRL tags will allow individual items to be uniquely identified in companies’ financial statements irrespective of which country they were created in, so they can be easily searched online and used for other comparative and analytical uses.
Ramin said the time for confusing wordsmithing around standard setting was over because XBRL will allow users to collect data with the same meaning using the electronic tagging system – without the need to converge local GAAP and IFRS.
“The standard business reporting using XBRL is the future because it is independent of the taxonomy used. They don’t have to use IFRS and they don’t have to use US GAAP as long as there are the same definitions there,” he explained.
In February, the US Securities and Exchange Commission ruled that public companies with a worldwide public float of more than $5 billion will have to report their financial results using XBRL by 2011, with 500 of the largest US companies to begin filing using the interactive data tagging as early as 13 April 2009.
Ramin also says the recent codification of US GAAP will make the implementation of XBRL much easier.
The US Financial Accounting Standards Board’s codified GAAP became the sole authoritative source of non-governmental US GAAP for reporting periods on 1 July.
The codification reorganises the thousands of GAAP pronouncements into about 90 accounting topics and displays all topics using a consistent structure.