Q – After the SEC’s XBRL mandate for all listed companies in USA, we are seeing an improved pace of adoption by regulators around the world. But this is for complying with the regulatory requirements. Will the companies adopt XBRL for regulatory compliance only or do you think they will implement XBRL into the entire information system? How do you see the future of XBRL?
A – I see regulatory frameworks as a main driver of XBRL adoption for the next several years. As companies around the world become more aware of the benefits of implementing XBRL into their internal systems I predict an increasing number of companies both adopting and consuming XBRL for benchmarking, performance improvement, internal process improvements and analytics.
Q – XBRL is the de-facto standard for financial reporting and is gaining popularity as a standard for non-financial reporting (ESG data) also. What is the future of XBRL for non-financial reporting and Integrated Reporting?
A – Global Reporting Initiatives (GRI), along with several other non-financial information standards, have selected XBRL as the format standard for their reporting standards. GRI has already released its G3 Taxonomy for reporting of ESG data and is working on G4 Taxonomy. As many countries are adopting XBRL, people around the world have started chanting about Integrated Reporting. Harvard Business Review has published “The Landscape of Integrated Reporting.” Accountability shall be presenting the framework for Integrated Reporting at the meeting of G 20 nations in Nov 2011. I see a clear trend of adoption of XBRL as a standard for financial & non-financial reporting purpose and this will set the pace for XBRL as the standard for Integrated Reporting in future.
Q – Today, there is no regulatory requirement of assurance on XBRL instances. However, it is expected that XBRL instances may require audit assurance in the future. What are your thoughts on the future of XBRL Assurance?
A – True, today there are few regulatory requirement of assurance on XBRL instances. The current SEC rule for XBRL filings carries limited liability on XBRL instances for the first two years only. While the SEC and PCOAB have been silent about the long-term position on assurance for XBRL, I predict the topic will gain increasing attention as XBRL data become more integrated into investment and analytic models. The global assurance community is working on this topic and I expect them to come out with guidance on XBRL Assurance in the coming months.
Q – Now that Phase – I of XBRL filings with SEC is already over wherein the top 500 companies have already submitted financial data on XBRL under SEC rule and another 5,000 companies have started submitting their financial data on XBRL from Jan 1, 2011, so there is enough interactive data available for analysis and comparison purpose. Will this set the pace for Analytical Tools for comparison & analysis purposes? Do you see companies coming out with Analytical Tools? Do you see more demand for XBRL coming up from Investment Analysts?
A – Yes, although only the Top 500 companies have submitted data on XBRL under SEC rule there will quickly be enough data for testing and production use of Tools for analysis and comparison purpose. Some companies have already come out with Analytical Tools and we can expect more companies coming out with such Tools. As more and more companies submit their financial data in XBRL and larger amounts and periods of data are available the demand for Analytical Tools for Investor Analysts will increase.
Q – XBRL experts are in short supply all over the world today. How can we bridge the gap between the availability of trained manpower and requirement?
A – There is an emergent need for training and education on XBRL. I think XII and the various national accounting bodies around the world are playing an important role in this area by educating our members on XBRL. XII is actively developing a Foundational Certificate Course on XBRL. This will help bridge the gap between the availability of trained manpower and the growing demand of XBRL trained people.
Q – How can XBRL be made more popular?
A – Through continued education about the process benefits of XBRL adoption, greater support for those adopting XBRL and fostering an innovative tool and services community to support XBRL projects and data consumption.
Q – Aberdeen Group has come out with the first Research Report on XBRL titled “Enabling Compliance and Business Improvements through XBRL”. What are your thoughts on this Research Report? How will it affect the market?
A – I think they have done a good job in compiling the information on present and future trends on XBRL adoption by companies. I think the most important finding in this report identify that companies that adopt XBRL internally are the top performers in their industries. I think these findings speak volumes. ***
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