Noting that XBRL has the potential to improve the effectiveness of
financial reporting, IASB Chair Hans Hoogervorst said that XBRL has the
potential to supplement the one-size-fits-all approach of today’s financial
statements with an à la carte menu of financial information. In remarks at the
IFRS Taxonomy Convention, the Chair said that this will allow users to extract
the information they need, and no more. While XBRL enables retail investors,
employees and casual observers of a company to extract information on key
corporate metrics, more sophisticated users are free to slice and dice
financial information and wade through as much or as little information as they
need, he noted.
XBRL also
has the potential to eliminate the re-keying of financial information into
proprietary systems, he noted, thus reducing cost and error while increasing
the speed and efficiency of analysis. Further, XBRL allows users of financial
statements to consume financial information in whatever language they are
familiar with. These are all significant benefits, he posited, and there is no
doubt that XBRL is an idea whose time has come.
However,
he cautioned that standard setters should be careful about promising too much.
While XBRL is an important form of presentation, he said, standard setters must
be realistic about what XBRL can and cannot do. The XBRL standard should not
define the Board’s standard-setting activity, the IASB Chair emphasized, adding
that ``the XBRL tail should not wag the IASB dog.’’ Rather, XBRL should be a
normal output from the Board’s IFRS standard-setting work.
The IFRS
Foundation and the IASB have three XBRL priorities. First, the IFRS Taxonomy
must be of the highest quality. Second, the Boars must be more sensitive to
XBRL requirements throughout the lifecycle of its standard-setting activities.
Third, continued the Chair, the Board must work with other members of the XBRL
community to unlock the potential of this important technology.
The Board
has invested significant resources in developing a high quality Taxonomy, noted
the Chair. To further enhance the quality of the Taxonomy, a few years the
Board established two advisory committees: the XBRL Advisory Council and the
XBRL Quality Review Team. According to the IASB Chair, these two committees
have been extremely useful in helping the IASB with its work. The Chair pledged
that the Board will work closely with FASB, the Global Reporting Initiative and
elsewhere to offer the highest levels of compatibility between respective
Taxonomies.
The Board will also ensure that XBRL is deeply integrated into its standard-setting activities. XBRL is no longer an afterthought to standard-setting activities, said the Chair, adding that Board technical staff now work with their XBRL colleagues throughout the entire lifecycle of the project, considering tagging implications as the standards are being drafted. In addition, the Trustees’ Due Process Oversight Committee, responsible for oversight of our standard-setting activities, applies the same rigor to XBRL oversight as it does to the IASB’s standard-setting activities. This is all designed to ensure that XBRL is a normal function of IASB standard-setting work, said the Chair, no more, and no less.
Finally,
the IASB Chair noted that the European Parliament is considering embedding XBRL
in the new EU Accounting Directive. In 2002, the Parliament voted
overwhelmingly in favor of adopting IFRSs for use in the European Union, he
pointed out, which provided the necessary encouragement for most of the world
to follow suit. The IASB Chair hopes
that the same will be true with XBRL.
In October
2011, the European Commission proposed replacing the two Accounting Directives
(78/660/EEC and 83/349/EEC) with a single Directive better adapted to the
present and future needs of preparers and users of financial statements. Dr Wolf Klinz, Member of the European Parliament, is the
European Parliament Rapporteur for the new Accounting Directive.
The
rapporteur is in favor of introducing the mandatory preparation of financial
statements under an electronic, multi purpose XBRL format, which was already
requested by the European Parliament in the past in the Future Structure of
Supervision (2008/2148 (INI)) and Small Business Act (2008/2237(INI)) resolutions.
Dr. Klinz believes
that a number of benefits brought by one harmonized electronic format could
contribute to the creation of a one-stop reporting system used in other fields,
for example taxation. However, recognizing that mandating XBRL could be quite
burdensome for many small companies, the rapporteur suggests introducing it
after appropriate preparation, including involvement of the European Securities
and Markets Authority, from 2018.