Time for alternative Jurisdiction structures

It is becoming clear that the current jurisdiction model is failing. The core problems are ones of barriers to entry and free-riders. XBRL International Inc (XII) could significantly increase uptake and adoption of XBRL by allowing the creation of non-geography based jurisdictions, and ensuring that all existing jurisdictions actually pay the jurisdiction fees and/or their appropriate percentage of actual "membership" related income.

First I would like to say that I like the jurisdiction model, if for no other reason than this provides a structure to bring like organizations together to promote solutions to their common XBRL reporting issues. The geographical nature of jurisdictions unfortunately limits that "like organization" concept.

Currently if an organization wants to participate, the only official options are to join the jurisdiction in the geographical area in which it does business or is based, or to join XBRL International as a direct member if no jurisdiction exists in their geographical location. (In XII term, a geographical area is synonymous with a country). This stops the formation of special interest based jurisdictions that could support specific industries or interest groups (or course, two such jurisdictions exist, but creation of new examples is precluded by the by-laws).

Three examples of potential Jurisdictions

Microfinance: One potential jurisdiction that comes immediately to mind is the Microfinance industry, and possibly one representing the more general NGO world. Such a non-geographical, single-issue jurisdiction already exists to support the world wide adoption of one financial reporting system, so clearly the model is valid, and only the the XII by-laws preclude the creation of such a jurisdiction. Of course, the vested interests of some existing national jurisdictions could stop the formation of additional special interest jurisdictions.

Risk Management: Imagine what could be accomplished with a global risk management jurisdiction. This could be hosted by or supported by organizations such as the Professional Risk Managers International Association (PRMIA) or the Open Compliance and Ethic Group (OCEG). Such a jurisdiction could spearhead the development of a GRC (Governance Risk and Control) taxonomy, and advocate for the introduction of XBRL into governance, risk, internal controls and event reporting processes and systems.

Sustainability: Likewise there could be a jurisdiction specifically bringing together organizations committed to effective reporting of sustainability issues. There are currently too many standards for ESG (Environmental, Social and Governance), CSR (Corporate Social Responsibility) or any of a plethora of other acronyms all focused on delivering standards for sustainability reporting. Imagine such a jurisdiction hosted by the UN Development Programme (UNDP), currently chaired by the Honorable Helen Clark, who previously served for nine years as Prime Minister of New Zealand. Such an organization might provide a sound environment for hosting either an NGO and/or an ESG jurisdiction. We've long talked about sustainability information as appropriate for XBRL reporting, yet to date only a few companies in Spain have actually created XBRL version of CSR reports. The Global Reporting Initiative (GRI) continues to talk about the importance of XBRL for GRI compliant reports, yet no progress has been made since 2006.

Jurisdictions paying their fees

Wouldn't it be nice if all jurisdictions actually paid for their right to participate and lead. Unfortunately gaming the system seems to be the accepted norm. I have already written about at least one jurisdiction whose "membership" structure allows for the retention of revenue in their jurisdiction. I have also made recommendations on how to resolve this going forward.

Yet there exists another jurisdiction that pays no fees. None. What is remarkable is that this is also one of the very few non-geographical jurisdictions. I find it remarkable that they get a free pass, or should I say, get to ride free on the backs of other more poorly funded jurisdictions who either pay their fees or are forced to disband as a jurisdiction (as has happened to at least one). Perhaps if they want to continue to use XBRL as such a key element of their programme, they could pay their share. Most recently, one propective jurisdiction has just informed the ISC that they will not be progressing to the next level of jurisdiction due to funding constraints and their decision to spend their funds on local projects.

Summary

With these two changes in the way XBRL International approaches jurisdictions, I am convinced that XBRL adoption will be significantly advanced. There are many opportunity for XBRL, and we should do all we can to create and support a jurisdiction model that actually encourages participation, expansion and adoption. We should also change a model that creates land supports barriers to entry and participation, reduces participation, stifles communication, and provides advantages to vested interests. The business reporting supply chain will benefit. XBRL adoption will increase.