Businesses have dealt with financial data, information, reporting, and disclosures what they have not dealt with is the amount of accuracy and reliability companies require these days. Regulations, legislations have always been there, what has changed is their rigor. Clearly making regulatory environment very complex and severe and also leaving the companies grappling with ways on how they go about demonstrating, documenting and reporting compliance
Requirements change as regulations are amended and expanded. The constantly evolving standards of regulations cause strains in the relationships between companies and their external auditors. Such changes disrupt the way companies meet their compliance needs. The Securities and Exchange Commission (SEC) require companies to provide information more quickly and mandates that high-level executives sign off on the accuracy of financial statements. They are also calling on companies to provide information in an easily understandable format that supports evaluative and trend analysis1. For the large companies, it applies beginning from June 2009, for all public companies within the next three years. Compliance with a regulatory mandate and plethora of guidelines- is inherently difficult.
However the common challenges most regulators face in their reporting procedures include6:
The challenges and financial burdens do more than just encourage companies to find better and efficient ways - drive usage of eXtensible Business Reporting Language (XBRL).
Instead of treating financial information as a block of text - as in a standard Internet page or a printed document - XBRL provides an identifying tag for each individual item of data. The introduction of XBRL tags enable automated processing of business information, allowing the data to be treated “intelligently”3.
This greatly increases the speed of handling financial data, reduces the chance of error and permits automatic checking of information. Use of XBRL reduces the cost of analyzing performance data and makes comparative analysis of multiple companies’ easier, improving transparency. XBRL provides a standardized manner by which data in financial statements can be described—it does not change the data2.
Why regulators should adopt XBRL?
The worldwide adoption of XBRL has not come as a surprise. The factors driving the adoption of XBRL are the process efficiencies, information transparency, and significant cost saving that it brings in dissemination and analysis1. These are the key processes in regulatory compliance.
Evidently XBRL adoption does not only improve efficiency, control risks, and introduce enhanced flexibility in the way companies manage their business and respond to the constant change and fluid environment in which they operate, but also3:
What are the challenges in implementing XBRL?
XBRL offers major benefits at all stages of business reporting and analysis. It has world wide relevance, is intended to support all current aspects of reporting in different countries and industries. But has some challenges associated with its implementation. Some of them are as follows:
Though XBRL is not a magic bullet -it has its share of challenges. But it’s a breakthrough in the reporting technology. It’s a technological tool that possesses many benefits for businesses, corporate managers, accountants, regulators, and the general public. It can fulfill your compliance requirements by capturing your vital business information and if used properly it can yield benefits to a wide spectrum of audience. Implement XBRL for a cleaner, more accurate data increased productivity and greater efficiency and measurable ROI and bottom line impact.
Metric Stream’s support for XBRL
MetricStream provides support for XBRL for publishing reports in XML to various regulatory agencies. Various data elements can be mapped based on appropriate taxonomy and published using XBRL. MerticStream is committed to an open architecture and extensibility is a key aspect of our platform. We will continue to enhance our interfaces to conform to the XBRL standard.