This is the second installment of a four-part interview. The first part discusses the basics of XBRL CH.
3. The Big 4 firm Deloitte describes the financial reporting framework in Switzerland as follows:
Switzerland is not a member of the European Union and, therefore, is not subject to the EU IAS Regulation or Accounting Directives. The Swiss Foundation for Accounting and Reporting publishes accounting standards (ARR/FER, or 'Swiss GAAP'). Compliance with ARR/FER is required by all companies. However, compliance with IFRSs ensures compliance with ARR/FER, and many large Swiss companies have, for a number of years, followed IASs/IFRSs.
Starting with annual reports for 2005 and interim reports for 2006, most Swiss companies whose equity shares are listed on the main board of the Swiss Exchange are required to prepare their financial statements using either IFRSs or US GAAP. Swiss GAAP will not be permitted. The only exception is for Swiss companies listed on the main board that are not multinational (that is, operate primarily in Switzerland). Those companies may continue to use the Swiss GAAP, or they may choose IFRSs or US GAAP.
What impact does this FR framework have on both the development and use of a Switzerland-specific XBRL taxonomy?
It’s a major factor, which is often misunderstood. For us as the Swiss XBRL jurisdiction, it means that we don’t have the same evident Unique Selling Proposition in a single local GAAP taxonomy. In other words, all major firms already have access to a taxonomy covering their reporting needs, be it IFRS or US GAAP. There simply is no local GAAP requirement that Switzerland-based multinationals have to comply with.
Consequently, Swiss GAAP FER is a niche standard for small- to medium-size public and private entities, which is derived from IFRS, but without most of the complexity and associated cost. That is what makes it attractive; indeed, a few industrial firms have recently switched from IFRS to Swiss GAAP FER. However, the new IFRS for SMEs standard might lure some privately held preparers away from Swiss GAAP FER thanks to its immediate global recognition, which may be an issue for international investors and creditors. There is no Swiss GAAP FER taxonomy available to date, but we are certainly interested in helping to create one, once the initial OR taxonomy is done.
4. XBRL Planet lists three financial regulators for Switzerland:
- Cantonal Commercial Registries, the companies registrar;
- Swiss Financial Market Supervisory Authority (FINMA), the banking supervisor;
- SIX Swiss Exchange, the securities regulator.
How do you see the prospects and progress of XBRL implementation for each of these primary regulatory bodies?
Both FINMA and SIX Exchange Regulation are observers at XBRL CH, so they know what XBRL can do for them. However, given the country’s important financial sector, a reporting infrastructure with its associated investments and know-how has been in place before the arrival of XBRL, and certainly before the arrival of XBRL CH. Hence we are playing the long game, watching developments on the EU landscape with CESR very closely. FINREP and COREP may become important building blocks, but as long as the Swiss National Bank (SNB) relies on its proprietary XML framework (as does the UK FSA), XBRL has little to contribute for the moment.
The Commercial Registries are a different matter. We can start approaching them once we have the OR/GCD taxonomies in place. Remember, though, that privately held entities only report to their owners, creditors, and tax authorities. So, the Registries have no accounts on file.
5. With fewer than 8 million people, Switzerland is nevertheless headquarters of some of the world’s largest corporations -- Nestle, Credit Suisse, and Roche among them. Numerous Swiss firms have or will be reporting in XBRL in the US under the SEC mandate. What impact, if any, has interactive data reporting by Switzerland’s international firms had on XBRL developments within Switzerland itself?
Marketing-wise, the mandate has helped us immensely. We can claim that the crème of corporate Switzerland is already subject to XBRL reporting requirements anyway, so what’s the fuss? Also, we have a “captive” audience from those firms, which are interested in learning and exchanging views about the latest developments. Hence, you could argue that we have a core group of competent professionals from the preparer community in the country, but this group is understandably driven by a compliance agenda with relatively limited interest in what’s happening locally.
Nevertheless, we are happy to cater to their needs and to provide a platform for fruitful exchange. XBRL CH has already hosted a number of successful events with many excellent contributions from that community.