As XBRL continues to evolve and as accounting standards continue to change, we’re working at the IFRS Foundation to integrate the further development of both accounting standards and the IFRS Taxonomy into a seamless process.
The organizational structure for the development of the IFRS Taxonomy is a little different under the International Accounting Standards Board than it is for the GAAP Taxonomy under the Financial Accounting Standards Board. In the U.S. case, FASB is both the accounting standard setter and the keeper of the XBRL Taxonomy. In our case, the IASB is the standard setter; but its overseer, the IFRS Foundation, is responsible for maintaining and updating the IFRS Taxonomy.
This presents us with some tricky, but not insurmountable, logistical challenges in keeping the taxonomy and the accounting standards developing synchronistically. Our XBRL team keeps close tabs on the agenda of the IASB to assure our taxonomy development follows as closely as possible the accounting standard setting process.
The goal is to assure the Taxonomy keeps pace with changes in accounting standards so that companies filing in XBRL aren’t left wondering if the tags they are selecting are currently compliant with their reporting obligations. It seems paramount on us as participants in the regulatory pipeline to assure companies that this is one risk they need not worry to mitigate.
While there was a significant start-up to developing the Taxonomy and bringing it current with existing standards, now the focus is to look around the bend at standards that are in development and develop the tags in tandem with the standard setting process. Today, when the IASB releases a new standard, we can follow them by only about a week with the XBRL tags that are necessary to assure compliance with the new standard.
It leads to a question about whether this standard-setting and taxonomy-writing process might one day in fact be performed by the same entity. It’s a legitimate question, but recent events raise reasonable doubt about whether it is possible.
For example, our XBRL team was recently called upon to produce some 300 additional tags in the IFRS Taxonomy that can be used to describe common reporting practices among IFRS filers. These are tags that reflect things companies commonly include in their financial statements, but that are not necessarily explicitly required under IFRS.
The goal is to give companies using the more principles-based IFRS some additional tags that will minimize their need to create customized extensions, thus enhancing their overall comparability. But as these tags are not reflective of statutory requirements, does it make sense for them to be written by the accounting standard setter itself? In this respect, there may remain an ongoing need for the XBRL Taxonomies to be developed and maintained by bodies other than the accounting standard setters.
by Olivier Servais