XBRL stands for eXtensible Business Reporting Language. Put simply, it is a standard that was developed to improve how financial data is communicated. A family member of "XML" languages, it is becoming a standard means of communicating information between businesses and of sharing data online.
Managed by a global, non-profit consortium, XBRL International, one can think about the transition from paper, PDF- and HTML-based reports to XBRL ones as being similar to the change from film to digital photography, or from printed maps to digital versions. In the same way that digital maps feature new layers of information and functionality, a digital business report in XBRL format simplifies how people use, share, analyse and add value to data. The Companies and Intellectual Property Commission will mandate the digital reporting system for all qualifying entities from 1 July 2018.
Here are a few of the main benefits of XBRL:
- Automate routine tasks, which reduces costs and boosts efficiency.
- Enter data into systems without reformatting or translating it.
- Speedily and automatically identify problems with filings.
- Quickly, efficiently and reliably analyse and compare data.
- Monitor data and activities and reach judgements with greater speed and confidence.
- Focus on analysis, decision-making and dealing with counterparties rather than on data manipulation.
- Provide faster and focused responses to counterparties.
- Eliminate duplications and differences in reporting.
Why is it important and what does it do?
The aim of XBRL is to reduce the amount of admin that businesses must endure when they report financial information to government for regulatory compliance. To get this right, the duplication and inconsistency of business information reported to various government agencies is dramatically reduced.
At this point, you may be wondering what relevance XBRL holds for you and your business. XBRL is used in many different ways, and for various purposes, by people in separate roles. Some examples are:
- Regulators: This includes financial regulators, securities regulators and stock exchanges, business registrars, tax authorities and statistical and monetary policy authorities.
- Companies: Any company that needs to provide information to one or more of the regulators mentioned above. Enterprises that frequently move information around in a complex group and supply chains that exchange information to manage risk and measure activity.
- Governments: XBRL is relevant for government agencies looking to harmonise data definitions or consolidate reporting obligations. In addition, this standard helps agencies to standardise how consolidated or transactional reports are prepared and used in government agencies and/or shared in the public domain.
- Data providers: For specialist data providers, XBRL makes it easier to create comparisons, ratings and other useful information products for different market participants.
- Analysts and investors: XBRL can be an asset if understanding relative risk and performance is part of your role, or if you need to compare potential investments and understand the underlying performance of existing investments.
- Accountants: Accountants are usually involved in XBRL reporting. They prepare XBRL reports and use it to support the reporting requirements of clients.
As a leading global provider of auditing and financial software, and relied on by more than 20 000 users in Africa, we have the experience and expertise to help launch you on your XBRL journey. Get in touch with us to find out more.