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

Convergence is a term we hear a great deal these days to describe efforts to reduce the major differences between International Financial Reporting Standards and other major systems of accounting, especially the Generally Accepted Accounting Principles followed in the United States.

However, convergence can also be used to describe the efforts under way among XBRL teams in various countries. At the IFRS Foundation, our XBRL team is working with the XBRL team at the Financial Accounting Standards Board and the team in Japan developing the Electronic Disclosure for Investors NETwork (EDINET) to reduce significant differences in our respective Taxonomies.

While IFRS and GAAP preparers in particular may find some differences in the way specific tags are named, or specific definitions for those tags are worded, the goal is to assure the tags in the IFRS and GAAP taxonomies for comparable elements are essentially the same. Both XBRL teams have worked through existing standards to develop tags, so now going forward it is our goal to produce tags in tandem with the issuance of standards.

For example, the XBRL teams for IFRS and GAAP meet twice monthly to discuss new standards that are being developed by the FASB and the International Accounting Standards Board. At these sessions, we work to identify and refine the tags that will be necessary to reflect those standards that are developing, mindful to assure they will carry the same essential meanings in both IFRS and GAAP. Then as we update our respective Taxonomies and received feedback and comments on those changes, we can further assess the extent to which they both reflect the accounting standards and assure the greatest possible level of comparability.

We follow a similar process in working with the EDINET team at Japan’s Financial Services Agency, although this system of electronic, data-interactive filing is not quite as mature as XBRL for IFRS and GAAP at this point in time.

The goal is to assure that preparers and users of XBRL-submitted data can use any tool in the marketplace – Hitachi, SAP, Oracle, or any other of the myriad choices that are developing – and encounter no technical difficulties when they switch from filings submitted under different accounting conventions. We want to assure users can navigate whatever tool they’ve chosen without any difference in how the tags function or define financial data submitted under different sets of accounting standards.

As preparers and users of financial statements continue to navigate through XBRL architecture to find and use financial statement data, XBRL teams will be listening for feedback on how well we’ve met the objective of assuring comparability.

by Olivier Servais