Deployment by major regulators and stock exchanges around the world is growing; the U.K. Financial services Authority, the US Federal Financial Institutions Examination Council, the U.K. Inland Revenue, the Australian Tax Office and Korea’s KOSDAQ and the Toronto stock exchanges, to name a few, have all adopted XBRL and many more are exploring implementation. Now that XBRL Web services is gaining widespread acceptance, and is available through most of the software businesses use, accountants are taking a hard look at the implications for their own profession.
The need for Independent assurance on business information will not go away. If businesses are adapting to more, better, faster information exchange, the accounting profession will adapt its own processes and capabilities to accommodate those changes. PwC is doing a good deal more; we are committed to leading financial reporting into the 21st century by taking steps to anticipate how assurance needs will change with freer information flows in an XBRL Web services reporting world. We are educating clients, software makers, regulators and financial-market participants about the benefits XBRL Web services capabilities provide for business-information production and consumption.
How does XBRL change the nature of information sharing and, by extension, assurance needs?
First, as a universal information-format standard for business data, XBRL Web services provides a platform for establishing common definitions and contexts for each piece of business data across supply chains, industries and even nations. Through these common standards, software the world over will be able to understand and process information contained within business reports consistently and accurately.
Second, XBRL is a critical tool for re-engineering reporting processes within companies and across the corporate reporting supply chain. It isn’t only companies that need to understand XBRL data definitions, capital market participants must also understand them to accurately use the information companies provide for valuation determinations. We are working with several organisations around the world, including influential regulators and companies, on XBRL Web services implementations in their current systems environments. The purpose is to help them achieve faster, more controlled and accurate, and, thereby, more reliable information consolidation and exchange needed in today’s business world.
Third, XBRL Web services reports differ from paper based reports (and digital representations of paper based reports) in a crucial respect: information is not locked into the document but, rather, can move freely and independently of its presentation at the request of information consumers. In fact, while XBRL Web services enabled information can be made to appear as if it is contained in a familiar “report” format, recipients may never even see the entire report but only the information they ask for and receive in their own desktop analytical software.
This means assurance must be enhanced to address the attributes of a format in which information is instantly accessible and re-usable in an automated manner. In addition to market and regulatory information demands, we understand managers’ own needs to get more of the information resident in company systems and, further, to broaden their analyses to include specific measurements and non-financial value drivers that are difficult, if not impossible to obtain today in a timely and effective manner.
Fourth, XBRL enabled information is ready-to-use upon publication in a Web services environment. Whether the information is a single transaction entering a company’s internal systems or parts of a company report entering an investor’s analytical software, business information is immediately ready for re-use; companies can exchange information with each other and with stakeholders in real time or with little delay.
This means the job of ensuring data efficacy and accuracy is moving from the current periodic model to one that is more continuous. We are working on relevant standards for this purpose. To better understand how this might impact company reporting and investor analysis in the capital markets; please see the pilot demonstration located here: http://www.nasdaq.com/xbrl.
Fifth, XBRL encompasses the entire corporate reporting supply chain—accountants included. If the rest of the supply chain is moving at the speed of business, accountants cannot expect to continue using manual, paper based processes to provide assurance. Accountants will need to enable their own tools and systems to quickly absorb and process information in an XBRL Web services environment. This will make them more effective in their roles of handling, aggregating, analyzing, reporting on and assuring business information.
New capabilities in business-information exchange are transforming the business world. Through XBRL Web services, reporting processes will be more efficient and information will be more accessible. The change will impact the way business works across the entire corporate reporting supply chain—including the accounting industry. Accountants must adapt to the world of their creation to maintain their critical role in the capital market efficiency. PwC is committed to guiding the transition to 21st Century reporting and to ensuring that faster, freer information flow also means greater information accuracy, integrity and reliability.