The march to high-quality business information has its roots in the very first computer. Entering words and numbers in a computer as a series of organised zeros and ones permitted the first computer users to store records that were machine-readable and able to be transformed into human-readable reports. Initially, computer power and storage were expensive and cumbersome. Specific applications were developed in response to particular needs of business. Accounting ledgers and 14-column worksheets were replaced by accounting application programs and advanced spreadsheets. Manual schedules for production were replaced by material requirement’s planning. Sales reports about customers and their needs were replaced by customer relations management applications. The advances in computer processing power, storage capabilities, and the development of more ways to add information to data have paved the way for a radically new approach to collecting, storing, retrieving, and reporting business information : to build an entire information system around the ‘data’, not around the applications. The world of extensible markup languages, such as XBRL, allows companies to add supporting data to the base transaction. Data that’s treated with additional information — i.e., further information about the data frees up the organisation to not only use and reuse the data multiple times, but it offers the additional advantage of being able to drill down into the data to better understand its origins.

This is part of what we have already examined in the earlier articles. We have also observed that the current reporting scenario is becoming more and more demanding, considering the state of affairs that exist today. There is a lot of pressure to give not only timely but accurate and consistent reports. There is a perceived void between the ideal and ground reality. This is the void that those associated with this subject have been striving to fill.

This being the stated position, where do we stand as practitioners in this arena of global economics ? Agreed that XBRL is all about automated processing of the financial reports, which will provide the reader/user of the financial reports faster, more reliable report which has an inherent capacity to provide analytical and more meaningful information, thereby enhancing the use of the report, but all these facts need to be chewed over with a dash of salt (read scepticism).

As students of accountancy one statement that was often heard was, ‘Accountancy is an art, it is also a science’. Those users of financial statements with no training in accountancy would agree and will say that preparing a Balance Sheet seems pretty much like a black art (magic).

Even amongst trained accountants, much is open to interpretation and re-interpretation, and the same underlying information can be presented in a wide variety. Furthermore, practices are constantly changing as businesses find new ways to present their finances in the most favourable light allowed by laws and standards which are themselves updated to impose the ever-increasing transparency. While the presentation of accounting data is one of the primary-use cases for XBRL, one of the paramount goals of XBRL is to improve transparency, thus it would be unrealistic to expect a new technology to completely revise the operation of an established profession overnight ! So, XBRL has to be able to cope with modelling a highly complex domain without first reducing it to its simplest presentation.

For all its fluidity, the world of accountancy and business reporting is also highly regulated. In the wake of the accountancy scandals of the past few years, financial authorities around the world are imposing increasingly detailed and stringent reporting requirements on businesses. A technology designed to act as a medium for such reporting needs to be capable of high degree of semantic precision to suggest confidence that it reflects the appropriate accountancy frameworks without bringing in further ambiguity.

XBRL is fundamentally a publishing medium. Authors of XBRL documents make them available without much knowledge about how they will be used, or by whom. A given report might be consumed by a whole range of different users ranging from internal managers to external analysts and regulators. All of these users might be using different applications that seek to use the data in widely differing ways. This is a very different use case to a message passed between two carefully defined service interfaces ! In addition, many XBRL reports will be archived and used for historical purposes.

For XBRL to become a success story that it is being touted to be, what is needed is :

• Extensive and accurate 3rd-party reporting — income, deductions and asset sales and purchases.

• High-integrity taxpayer.

• Compatible legislative framework.

• High degree of automation (tax body and 3rd parties)

(The 2nd and 3rd bullets are mere wishful thinking, one would need Alladdin’s magic lamp for that, not.

In order to implement the principle and the system of XBRL, there is a long-drawn process. One that involves the laying down of standards, defining the reporting goals, thereafter arriving at a taxanomy. Once a taxanomy is accepted, the same will have to be incorporated in the existing systems/accounting/reporting softwares, which once again is likely to take time, (not to mention truck- loads of taxpayers) money, efforts, awareness and plenty of patience.

Here are some of the things that the readers may have to face. For starters, in order to be able to reap the advantages that XBRL has to offer, the average taxpayer/his advisor will have to invest in the enabling tool, (read licensed software), which as we all know is not going to be cheap, there is a good chance that your vendor (whose accounting/reporting package you are currently using) may come with a bundled software, but it’s not going to be without strings (remember the VAT mania). The next hurdle that the taxpayer will have to cross is the willingness to disclose information to the extent.

• It is not a Generally Accepted Accounting Principle or an Accounting Standard

• Universal chart of accounts

• Translator

• Licensed technology

The readers may appreciate the fact that given the challenges being faced by the XBRL team, they have to face never ending spec development, over complicated legislations, lack of tools, shortage of good and reliable data and lack of mandated compliance. Come to think it is a classic chicken-and-egg situation.

Our own experience with the ETDS returns has been a mixed bag of reactions, on one hand the government has been able to push for faster and more consistent reports. By entering into a partnership with the private sector, the Government has been able to push the reforms and at the same time, it has been able to introduce rapid and more accurate data collection methodology. On the other hand, there is a rumour that it has landed itself in even a bigger mess (unreconciled data uploaded from the collecting banks, due to lack of clarity and awareness, a whole chunk of the reports may have to be refiled). One can attribute these instances to teething troubles and XBRL may or may not get you there. In fact, there are all the chances that while implementing XBRL they may create the mother of all muddles that recent history has seen. But as they say, Destruction is the biggest reason for creation, perhaps the existing systems have become so redundant that it’s time that they have to make way for something more simpler and better. Till such time, farewell.