Statutory and regulatory reporting is hardly the favorite subject of pany managers, but most of them aept it as a necessary evil. The vast majority of businesses ply with its reporting requirements without much protest, supported by an army of aounting, audit, and IT professionals. 

In the many years I have been involved in the field not much has changed, and that seems a bit odd to me. It’s true that we have noticed a shift to digital reporting that improves timeliness and data quality. The old information exchange model is still very much in place, however. Regulators typically request the same information at the same time from every pany, so many ernment agencies have large puter systems that do major duty during “filing season” then are put on standby the rest of the time. Additionally, the existing dogma in regulatory reporting seems to be “one size fits all.” As the numerous spreadsheets floating around on servers and hard drives within anizations can attest, however, the aounting industry already knows that one-size-fits-all simply isn’t true.

Furthermore, regulators almost never nsult with other ernment agencies to get on the same page with their specific inquiries. In fact, it is difficult to align different investigations within the same regulatory agency. As a result, regulators repeatedly ask for the same information — information that’s already been reported, information that uld be obtained just by asking another agency. I get more than a little annoyed when I have to manually update three different calendars with the same information, and I know others share my frustration.

Managers may see statutory and regulatory reporting, and its requi inefficiencies, as proper and necessary, but that does not absolve regulators of their responsibility to innovate and make things easier for them.

In the herlands, the ernment, regulators, and business all have regnized this obligation. Toward that end, the ernment and regulators are llaborating in support of the adoption of Standard Business Reporting (SBR), a ntinuation and deepening of the Dutch Taxonomy Project begun in 2004.

Based on the XBRL standard, a national and cross-agency taxonomy has been created. The national taxonomy is not only for regulatory and statutory reporting; it can also be used for tax filing and statistical reporting. mercial banks have said they will use the taxonomy for credit assessment reporting as well.

Why is SBR important? It has bee increasingly clear over recent years that regulations, and the ways regulators operate, need to change. Regulators traditionally have faced the risk of not having necessary data; more recently, a different exposure has bee more prominent: having the right data but not doing anything with it. In the current global financial crisis, we now read reports of numerous red flags that simply were missed. So often, a simple cross-agency inquiry uld have revealed the truth but was not performed.

To address the need to use data properly, the current financial information supply chain simply is no longer sufficient. puter systems already are pushed to the limit. Systems may ntain the necessary data, but often they seem incapable of presenting it in a proper way to regulators. Meanwhile, regulators in turn are being reluctant to ask for more data, in part because it can be too time-nsuming to analyze additional information. Unfortunately, there are examples of regulatory reporting which is only that: reporting. In other words, data is sent and received, without any further investigation or analysis. For every regulator, this should be unaeptable. Unused data is a waste of the time spent preparing it, and its mere llection fails the public by providing a false sense of security.

The piles of data will only increase, so if information overload were the issue, all regulators ought to s llecting data. The real issue at hand isn’t information overload, however: it’s the need to search, find, and retrieve the information that’s been llected. To make information disverable for users, tracking and tracing data is an important prendition. Thus, tagging data with the help of an XBRL taxonomy facilitates search, retrieval, and analysis.

More must be done to make life easier for business, however. One of the key items for regulatory innovation is facilitating cross-agency llaboration. Regulators need to introduce more robust and more sophisticated information exchange models and build the infrastructure to fit those requirements, and software vendors need to build new systems that support users’ needs.

These needs are evolving, as boundaries between anizations blur. Goods, money, and people move around the world ever more quickly, and this faster circulation means a more rapid flow of rresponding data and information. This means that it’s necessary to develop new globally oriented views on what regulation in the future will look like and how it will function. The new regulatory dogma should be “Get the right information at the right time,” guided by the principle of cross-agency reuse of information.

Here is an illustrative parallel: this regulatory and reporting trend matches the development of GPS systems to replace paper road maps. When drivers use a GPS system, they are ncerned only with their own routes; they don’t need to open an unmanageable, one-size-fits-all paper roadmap. Each driver determines what destination to pursue and which road he wants to travel, and each driver gets his own route and the right information at the right time: “Turn right here.”

Similarly, statutory and regulatory reporting can move much closer to the actual needs of the users of information, and at the same time decrease preparers’ reporting and administrative burden. This improvement is the goal of the SBR program.

Businesses can motivate regulators to innovate and change their behaviors, as well. This is why the Dutch cross-taxonomy now is under nstant review by the public domain. People have asked, Why are these tags in there? Who is using this information? By shaping what information is defined by the taxonomy, the public shares a tool of regulatory ntrol: identifying, explicitly, what information is sought, at what intervals, and under which law.

It is in the interest of both the users and preparers to move towards the reuse and parability of information. Introducing digital reporting using open standards like XBRL can provide wonderful opportunities to achieve these goals, which will benefit everyone involved. Just ask your local regulator.