The local aounting profession supports a push to mandate the ernment’s Standard Business Reporting (SBR)scheme for financial reporting to the rporate regulator that would force listed mpanies to invest in XBRL technology.

In a joint submission to be submitted later today,CPA Australia and the Institute of Chartered Aountants in Australia (ICAA)will support a ernment proposal to make the use of software language XBRL to produce financial reports mandatory,but only for listed mpanies and only if there is a minimum of five years allowed to implement the change.The submission also advocates for the more advanced format of IXBRL.

In an options paper on the use of Standard Business Reporting (SBR)for financial reports,the federal ernment proposed that the adoption of XBRL enabled software to automate the lodgement of finance statements to the Australian Securities and Investments mission (ASIC)online be mandatory as a voluntary scheme has failed.Submissions close on Friday March 15.

The options paper was open-ended on whether SBR should be mandated for all 27,000entities that lodge financial statements with ASIC or only listed mpanies.

In the UK and Singapore all reporting entities are required to provide XBRL mpliant reports to the local rporate regulators.In the US the Securities Exchange mission has mandated the use of XBRL for listed mpanies only.

CPA Australia and ICAA are adamant that SBR should only be mandated for listed mpanies.The aountants have told the ernment it should not be mpulsory for non-listed entities reporting to ASIC or for not-for-profit anisations reporting to the Australian Charities and Not-for-profit mission.

One of the things disuraging listed mpanies from adopting SBR voluntarily is that even if they go to the effort and expense of implementing XBRL they still have to produce a PDF set of aounts manually,says ICAA head of reporting Kerry Hicks.

For this reason the aountants’submission calls for IXBRL,rather than its predecessor XBRL to beme the standard.IXBRL is superior because it is capable of producing a financial statement that a human can read as well as automating the reporting of the numbers between mputer systems,says Hicks.

“However,replacing the manual financial statement with one produced using IXBRL would have implications for the audit process that would need to be addressed.”

The two peak bodies agree electronic financial reporting would improve the standard of information available to investors but are ncerned about the difficulty and expense to mpanies associated with its implementation,says Hicks.

They say a minimum five year lead time would give mpanies the opportunity to get the technology embedded in their mputer systems during regular software upgrades.“This shouldn’t be an additional st on business,”says Hicks.More than five years may be required for listed mpanies outside the ASX 100,she says.

CFO peak body,The Group of 100,is also ncerned about forcing mpanies to shoulder the st of implementation.

The ernment’s SBR initiative enurages mpanies to lodge financial statements to ASIC as well as the Australian Taxation Office (ATO),Australian Prudential Regulation Authority (APRA)and state ernment agencies online using aounting software that is XBRL enabled to tag key information to automatically populate ernment systems.

But so far the SBR is only mpulsory for a limited selection of reporting to APRA under the ernment’s SuperStream reforms.

To date,the ATO has been the most suessful of the regulators in enuraging voluntary uptake of SBR,says Hicks.In part this is because tax reporting is more defined than financial reporting,but the ATO has also done a good job of promoting it,she says.The campaign has included a series of videos targeting small businesses presented by celebrity tradie Stt Cam on the ATO’s YouTube channel.

Response from industry and investors to the mandatory use of XBRL technology in the US has been mixed.“The tagging required in the US is much more extreme than what is being proposed in Australia,”says Hicks.

She also argues a more business friendly approach to making the use of XBRL mandatory in Australia uld lead to a better outme.“In the US it was introduced purely for the benefit of investors and didn’t take in to aount how it uld help mpanies manage their information better internally.”

“Using XBRL technology provides no benefit to mpanies if they tack it on at the end as a mpliance requirement,”says Hicks.“But if it is integrated into the system and embedded in the day to day aounts and management reporting it can be very useful internally.”

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