Views on improving the integrity of global capital markets
01 August 2014

XBRL: The Sequel: How Regulators Are Advancing the Use of Structured Data

Posted In: XBRL
Global Pension Crisis

In the world of technology, change and progress are a given. And eXtensible Business Reporting Language (XBRL) is no different. After more than a decade of use in various governmental and regulatory reporting programs globally, 2014 has brought additional advancements and enhancements in this data-structuring technology.

Much of the XBRL use has occurred in the reporting programs of prudential banking regulators and capital market regulators, the latter of which rely upon accounting regulators to maintain the field listing or taxonomy that reporting companies should use. Both the US Financial Accounting Standards Board and the IFRS Foundation annually update their associated taxonomies. These updates ensure that reporting companies have access to the relevant tags reflective of the current regulatory standards.

Taxonomy changes are not limited to accounting standards, however. The European Banking Authority (EBA) also provided an updated taxonomy related to the EBA Implementing Technical Standards (ITS) on supervisory reporting. A key goal of the updated list is to provide “greater efficiency in and convergence of supervisory practices across Member States.” The EBA release further stated: “The updated taxonomy issued today incorporates corrections to the COREP [common reporting requirements] and FINREP [consolidated financial reporting framework] reporting structures so as to be better in line with the published ITS, and new reporting structures for asset encumbrance.”

Regulators also are offering additional guidance on their XBRL reporting programs. The US Securities and Exchange Commission (SEC) did just that in July. In two separate releases, the US SEC provided staff observations on the use of custom tags and a sample letter to companies regarding calculation relationships. These recent actions by the regulator reinforce its intent to have high quality data submitted through its program for investors and others to access and analyze.

However, changes to current programs are only part of the discussion this year. The Bank of Mauritius launched the “XBRL-Based Reporting System, Data Warehouse and Business Intelligence Tools” project in July. The bank is looking to automate data collection and management with a single processing system. The plan anticipates the new system being active for reporting in October 2015.

Additionally, the use of XBRL reporting programs is reaching beyond the usual financial reporting arenas. The reporting system for recording payment into the Australian pension system began using an XBRL standard for communication. Firms have until July 2015 to ensure their reporting systems are compliant with the government’s requirements. The change from a paper-based to electronic system is expected to result in significant cost savings.

The Reserve Bank of India recently reviewed data gaps influencing the monetary-policy decision of several indices, including produce prices, labor force, urban wages, and household indebtedness. Along with recommendations on the scope and frequency of reporting data, the panel recommended “the use of extensible Business Reporting Language (XBRL) as the principal vehicle for data submission.”

Finally, US legislative bodies and the president agreed on the need to improve the transparency of federal spending data with the passage of the Digital Accountability and Transparency Act. This act, which aims to bring structured data to a broader element of governmental oversight, highlights the growing importance of technology in advancing data transparency.

Not all XBRL developments are about growth in the data-structuring technology, however. Indeed, there remains discontent among some in Congress over the impact of the US SEC’s XBRL program on small companies. If House legislation, the Small Company Disclosure Simplification Act, moves forward it would exempt “issuers with total annual gross revenues of less than $250,000,000” from the current XBRL reporting requirements for give years. This would significantly reduce the number of companies reporting structured financial data to the SEC.

These enhancements and advancements in the application of XBRL reporting further the proliferation of this data-structuring technology. We’re seeing similar progress in how the information reported into these programs is extracted and used by the regulator and investment community. In time, the reporting of unstructured data will become outdated.

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Photo credit: iStockphoto/Marchcattle

About the Author(s)
Glenn Doggett, CFA

Glenn Doggett, CFA, was a director of professional standards for CFA Institute. His responsibilities included providing member guidance in applying the ethics and standards of practice policies, supporting related educational and public awareness activities, and working with the Standards of Practice Council of CFA Institute on its initiatives. He was a co-host of the free, live, interactive webinars used by CFA Institute to promote ethical decision making and global best practices. Previously, Mr. Doggett, as a member of the CFA Institute Financial Reporting Policy Group, represented membership interests regarding reporting and disclosures initiatives, including XBRL. Prior to joining CFA Institute, he worked in the financial information sector with SNL Financial, where he focused on the real estate and energy industries, directing the development and maintenance of a financial data storage system. Mr. Doggett holds a BA in economics from the University of Virginia. He was awarded the CFA charter in 2006 and is a member of CFA Society Virginia.

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