XBRL, or eXtensible Business Reporting Language, is an open-licensing global standard on reporting financial and other information that aims to help countries and corporates…
R Jai Krishna
XBRL, or eXtensible Business Reporting Language, is an open-licensing global standard on reporting financial and other information that aims to help countries and corporates to take advantage of their data by using analytics and make informed decisions for their future. John Turner, chief executive of XBRL, in an interview with FE’s R Jai Krishna, says that the standard is aimed at bringing in more accountability and transparency. Excerpts:
Give us a brief about XBRL and how and where it is implemented.
XBRL is a global standard that is openly used and freely licensed, to improve business performance by converting defined information from paper to data. The advantage of structured data is that it helps to define business rules around it. We are the standards body for information and financial details, like W3C is to Web pages. There are 10 million companies in 60 countries and more than 100 regulators that use XBRL.
In Korea, the government uses XBRL to convert information into data to attract more foreign direct investment. In Japan, the regulators wanted to assess long-term environmental risks by collecting sustainability data. China and Russia are implementing to see how they can get ahead using structured data in a smart way.
If companies want to provide particular information apart from their financial statements, something unique to them, they can. It’s a flexible framework. To a large extent, different countries adopt it for different policies and different priorities.
Our aim is to enhance business performance, by improving accountability and transparency.
How does XBRL bring in accountability and transparency when some information is always withheld from public domain? Why do we need a global standard?
For many people it is true, for many others it is to improve trust. It facilitates that when you have structured data, there aren’t things that are much to hide. It’s not easy to hide. It depends on the country, it depends on the company. Standards reduce costs across the supply chain, and they reduce the barriers to entry. Standards with business rules that is testable… is much more effective than a bunch of paper. For the financial statements, it is like getting the information from the horse’s mouth. You get exactly what they produce and report.
Who has been the early adopters for XBRL: Regulators or companies?
Regulators have been the source of adoption. We are beginning to see companies using data to drive significant return on investments. The regulator’s benefit is clear: They get better quality data faster.
What kind of implementation has been there in India?
India has a very interesting set of implementations. In the banking sector, the Reserve Bank of India has asked banks to collate their risk reports in XBRL. This would organise data to simplify process. That’s very, very forward thinking. They are doing it smart. They are being very open and communicating well with their regulated industry. That doesn’t happen everywhere.
At the ministry for corporate affairs (MCA), they are collecting data from a small number of large companies to help transparency, improve performance and enhance trust in the market. MCA wants transparency, it is very refreshing to see. That’s not what you have everywhere. That’s terrific. The cost accountants here are very clear about benefit to members — to improve quality and usability of data.
The Sebi, and BSE have also some implementations, but I’ll call them pilots.
What has been the initial feedback from Indian companies?
In the Indian context, many companies and advisors think of implementation as a compliance thing, they think of it as a burden. In fact, they should be able to use and take advantage of the data. It is a bit of a mind shift. It is early days as yet.