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Digital Revolution in Compliance Reporting

Computers revolutionised the world of information decades ago. ‘Interactivity’, however has been a more recent phenomenon. Hitherto, data collection by Regulators has always been in ‘non-interactive’ formats like PDF, Word, etc. This scenario is changing as we go to press. Regulators worldwide are now focused on collecting data/reports in ‘interactive’ formats such as XML, XBRL, etc. A layman wonders what the difference between these formats is and what the advantages of interactive format are. Here is a ready reckoner:

	Non-interactive format	Interactive format	Advantage / Impact
File formats	Examples are .PDF, .doc, .docx, .xls, .xlsx, .html	.XML, .XBRL, .XSD	Advanced file format
Data consumption	Human readable	Computer readable	Computer query-able data
Data search	Manual through print or display on computers	Programmable; instantaneous.	Saves time, avoids manual errors
Preparation	Mostly through word processors and spreadsheets	Through specialist software and Taxonomies	Needs specialised preparation
Data validation	Moderate	Very high	Reliable data

Advantages

It is evident that ‘interactive data’ format has its advantages in terms of:

- Data reliability

- Instantaneous querying nature

- Data comparability across peers, across periods

- Data archiving in unified format

- Transparency in reporting

Challenges

XBRL format seem to be the ONLY global choice, at least at the moment. It has its own challenges in generating this report. One needs to have the specialised software, knowledge of the taxonomy (dictionary of accounting terms) and the ability to troubleshoot validation errors.

Solution

The following solutions are available to a compliance officer for XBRL reporting:

Generate in-house

For this, it is highly recommended that team involved in preparing XBRL reports undergo training to have a basic understanding of this technology.

Company is also expected to purchase an XBRL software (if it is not provided free of cost by the Regulator)

Accountants should spend time in manually tagging each meta-data within the financial report. This is the most crucial part as it requires careful selection of accounting concepts from the list in the taxonomy.

Rely on your Accounting / Auditing / Secretary Firms

No doubt they will get this job done, but at a very high price tag and at a time period convenient to them.

Outsource XBRL work to service providers

Here, you simply forward your final version of the Accounts. Such XBRL service providers would tag each meta-data in your Accounts and return the validated XBRL file to you. Their cost could surprise you as it usually tends to be just a fraction of what your Accountants would typically charge.

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