XBRL compliance enables better business insight
By Hannelise van Wyk, Enterprise Performance Management Engagement Manager at Decision Inc.
Becoming compliant with the XBRL (Extensible Business Reporting Language) is not something that has happened overnight.
The Companies and Intellectual Property Commission (CIPC) has been working on implementing the standard for the past several years. Unfortunately, even though the deadline for compliance (1 July 2018) has come and gone, there are still some local businesses struggling to get to grips with the new reporting requirements.
Many companies are still confused about what XBRL entails. There is a need to drive a strong data culture in South Africa for organisations to make sense of what they have at their disposal. XBRL can be an enabler to achieve this and make data more user-friendly for analysis to both the regulator and the industry at large.
According to the CIPC, digital reporting in XBRL will assist companies with filing their annual financial statements. And for the CIPC, it is enabling it to use the information at its disposal in better ways. Imagine being able to compare company data in an industry sector at the click of a button. Prior to XBRL this was not possible as it was a resource-intensive process of manually going through PDF (and other) documents to pull relevant figures.
XBRL can also provide investors with a much clearer view of what is going on in business today. Countries like the United States and the United Kingdom have been relying on XBRL for several years. But even though South Africa is slow in coming to the party, it is embracing the latest iteration of the standard (iXBRL) which is much more user-friendly to business people as opposed to the original XBRL format.
However, two major concerns remain. Firstly, companies need to carefully examine the software needed to implement XBRL effectively. How does the software fit into their digital roadmap? Smaller businesses can more readily embrace cloud-based options towards this. For large corporates, it is not an easy process to migrate.
And then there is the matter of cost. Not only do companies need to be concerned about implementation costs, but there is also license fees to be cognisant of. It is also in the former where complications can occur. XBRL is not something that can be implemented as a once-off and forgotten about. Instead, a business needs to create a sustainable process that is mindful of existing processes and systems. Every company will be unique in its adherence to and implementation of XBRL. Having the right partners and people involved will be critical.