XBRL News

By Tim Colebatch

THE Rudd Government is planning a blitz of reforms to reduce the cost of regulation to business — including requiring old regulations to be removed each time new ones take effect.

The Minister for Finance and Deregulation, Lindsay Tanner, last night promised to introduce a kaizen culture of "continuous improvement" in regulation, to end its rapid growth and begin "genuine deregulation".

While Treasurer Wayne Swan was in Melbourne cuddling up to the Business Council of Australia — whose budget submission this week backed Labor's critique of the Howard government, saying it had spent too much, and on the wrong things — Mr Tanner told the Sydney Institute the Government would put an accelerated plan for deregulatory reform to the Council of Australian Governments next month.

Mr Tanner said the reforms would include:

■ Standard business reporting, to allow firms to submit BAS statements, state tax returns, ASIC documents and Bureau of Statistics survey forms through faster, easier processes using their own software.

■ Nationally consistent occupational health and safety laws.

■ Streamlined environmental assessment processes to stop time wasting.

■ A fresh look at the 170 recommendations of the Banks taskforce on deregulation, which were delivered in 2006 but were mostly left unimplemented.

■ Regular reviews by the Productivity Commission of the regulatory burden in each sectors of the economy.

"We are serious about change," Mr Tanner said. "I want to break down the barriers impeding regulatory reform. I intend to introduce a culture of continuous improvement in regulatory activity — a culture in which government is always looking for opportunities to streamline regulatory processes."

This would include requiring any minister proposing new regulation to identify other areas where regulation could be removed or modified to reduce compliance costs for business, he said.

Regulatory proposals would not come to cabinet unless accompanied by a regulatory impact analysis endorsed by the independent Office of Best Practice Regulation.

Meanwhile in Melbourne, Mr Swan told a Business Council dinner that Labor was looking at years of fiscal reforms to enhance the long-term productive capacity of the economy: above all, "labour, infrastructure and skills".

"One budget can't do it all," Mr Swan said. "This budget and those that follow are the key policy documents for laying down our agenda to tackle future challenges."

He applauded the budget submission from the big business lobby, which urged Labor to widen its spending cuts to embrace a three-year freeze on real government spending.

Echoing the close relationship between the BCA and the Hawke Labor government, he enthused: "Your submission demonstrated that, in so many ways, there is a strong overlap between your priorities and ours."

The US Securities and Exchange Commission, which regulates the country's stock markets, gave a major push to the electronic financial reporting language XBRL with several new initiatives this month. John Stokdyk reports.

The SEC has accepted electronic filings in the extensible business reporting language (XBRL) for several years, and users can download these files for free from the SEC's online search engine Edgar.

SEC chairman Christopher Cox is an XBRL enthusiast who sees it as a "universal" language that represents the future of financial reporting. Earlier in February, Cox welcomed a report from the commission's advisory committee on improvements to financial reporting and vowed to consider its recommendations, which included making electronic filing of XBRL-tagged financial statements mandatory for top 500 companies.

The 112-page committee report acknowledged that not all the ingredients were in place yet, but predicted that some of the conditions were not far away from resolution. The first hurdle is to ensure that reporting companies have the capacity to implement the XBRL-based taxonomy for US generally applied accounting principles and secondly Edgar needs to be able to render the accounts accurately.

However one of the committee members raised concerns about whether it would be possible to provide third party assurance over the contents of XBRL-tagged financial statements - for example to ensure they applied the GAAP taxonomy correctly and that the XBRL documents did not create the potential to mislead investors. Independent assurance should be provided, the committee advised, providing that the extra audit did not result in a significant increase in costs.

Once these preconditions and reservations have been overcome, the committee urged the SEC to consider extending mandatory electronic filing not just for large domestic US corporations, but all other reporting companies.

In a parallel move, the SEC also introduced a new rule to eliminate a range of paper-based disclosures required from non-US listed companies. Granting an exception under rule 12g3-2(b) to foreign companies would mean that their non-US disclosure documents would have to be published electronically. This would make it easier for US investors to gain access to the material and to make better informed investment decisions, the SEC said.

To give tangible shape to these electronic reporting initiatives, the SEC launched an XBRL-based Financial Explorer to let investors compare the financial results of public companies. The Financial Explorer uses the underlying financial data to produce diagrams and trend charts for earnings, expenses, cashflows, assets/liabilities and financial ratios - without the need to copy and paste rows of revenues and expenses into a spreadsheet.

In addition to Financial Explorer, the SEC offers investors two other online viewers - an Executive Compensation viewer and the Interactive Financial Report viewer. The Executive Compensation viewer lets investors compare what 500 of the largest US companies pay their top executives and the Interactive Financial Report viewer helps investors gather, analyse, and compare the XBRL-based financial disclosures currently filed voluntarily by US companies.

"XBRL is fast becoming the universal language for the exchange of business information and it is the future of financial reporting," said Cox. "With Financial Explorer or another XBRL viewer, investors will be able to quickly make sense of financial statements. In the near future, potentially millions of people will be able to analyze and compare financial statements and make better-informed investment decisions. That's a big benefit to ordinary investors."

By Michael P. Cangemi

As financial executives of both public and private companies absorb the events and happenings of 2007 and look ahead at what's in store for them in 2008, FEI CEO and President Michael P. Cangemi has compiled the following list of the Top Challenges for 2008 - in no particular order: Global Convergence of US GAAP and IFRS. Are the US markets ready for principles-based standards? The first step towards answering that question is the Securities and Exchange Commission (SEC) decision in November to eliminate the US generally accepted accounting principles (GAAP) reconciliation for foreign private issuers that file financial statements in International Financial Reporting Standards (IFRS), as promulgated by the International Accounting Standards Board (IASB). Now on the agenda is consideration of the comments on the SEC concept release to allow US issuers to file financials in IFRS. On the flip side, we await another decision: Is the European Union (EU) ready to accept US GAAP without reconciliation to IFRS by non-EU based companies that list in the EU? And, will the EU continue to adopt IFRS with carve-outs, or will the EU follow IFRS, "as published by IASB?" With the IASB Small and Medium-Sized Entity (SME) standards also out for consideration, this is not just a public company issue. As FASB and IASB move toward global accounting standard convergence, the SME standard may likely keep pace with, rather than trail, the standards for public companies. Additionally, other priority issues include: strengthening the IASB's funding, governance and oversight as it increasingly moves towards becoming "the" global standard-setter in accounting. XBRL (eXtensible Business Reporting Language) and Interactive Financial Reporting. The SEC has clearly made XBRL a priority and continues to reinforce in all its communications that it favors a path toward adoption. Expect even more momentum in this direction in 2008 in advance of potential leadership changes at the SEC in an election year. By now, the full set of GAAP taxonomies has been released for public comment by April 4. Also, the SEC plans roundtables across the country to get preparer and user feedback. As the SEC moves forward with IFRS, the taxonomies for both GAAP and IFRS must also be considered together to ensure convergence occurs from a technology standpoint as well. Besides financial reporting, there are potential benefits in the areas of internal financial analysis and continuous auditing.

On February 13, 2008, the XBRL-based financial listed company taxonomy formulated by the Shanghai Stock Exchange (SSE) was "Acknowledged" by the XBRL International. The acknowledgement information has been released on the official website of the XBRL International (http://www.xbrl.org/FRTaxonomies/). All the technical documents of the taxonomy have been published on the SSE website of http://xbrl-cn.org to the public for wider application.

The Australian Bureau of Statistics (ABS) will spend upwards of A$500,000 (NZ$573,000) developing an extensible business reporting language (XBRL) infrastructure to streamline information exchange with external organisations.

The ABS is participating in a federal government initiative called Standard Business Reporting (SBR) which is aimed at reducing the regulatory reporting burden for business.

The ABS is seeking offers for an XBRL taxonomy development environment (XTDE) and has budgeted between A$300,000 and A$500,000 for the task.

SBR is a multi-agency, multi-jurisdictional programme led by the Treasury and involves the ABS, the Australian Tax Office, the Australian Securities and Investments Commission, the Australian Prudential Regulation Authority, and the offices of state revenue.

Based on overseas experience, and an "acceptance" by the accounting and financial services professions, XBRL has been selected for use within the SBR program.

XBRL taxonomies will be embedded within accounting software packages to allow the automated population of government forms based on financial and other information held in the software of the business.

"After user completion, editing and authorisation, the resulting data will be submitted electronically to government," according to the ABS.

XBRL taxonomies used in the SBR project may be generated from an environment called the data definition repository. The core of the DDR will be a technology neutral metadata store, in which agency data and form definitions will be "collected and harmonised".

The ABS anticipates the need for three capabilities within the XTDE — a taxonomy editing environment, a taxonomy collaboration environment, and a taxonomy testing environment. These may be provided by separate tools, or may be integrated within a single tool.

The ABS will begin work on the project in February.