Trust in the quality of information is extremely important for any complex economy. When high-quality, reliable data is available for stakeholders to make decisions, markets can operate more efficiently. Corporate financial and nonfinancial information is widely demanded by regulators, investors, employees, boards, consumers, and others. This information is crucial to a company’s long-term value creation and decision-making.
Since businesses are obligated to disclose this information, they are using technological tools and frameworks to move toward automation from manual processes. For example, digital reporting, such as XBRL or eXtensible Business Reporting Language, enables companies to provide high-quality information in a machine-readable form. It makes gaining deeper insights easier by applying data analytics for better decisions. While businesses and regulators are already using digital tools in financial disclosures, applying them in other areas is possible (e.g. CSR, ESG, etc).
What is XBRL?
To cope in this age of digital reporting, our article introduces the concept of XBRL and how digital reporting operates using XBRL.
Imagine a future where everything goes digital, people not reading newspapers since they can read news online, people not using cash since everyone has debit or credit cards… But, hold on, aren’t we there already? Well, partially, yes.
If you check out the reporting process of many large organizations, it’s quite surprising how un-digital it is. Instead, organizations have rely on paper, Word or Excel documents during their reporting process. Although it wasn’t their choice, there was no better alternative for them … until now.
A new and innovative approach called XBRL allows you to exchange reporting information (both financial and non-financial) in digital form. Today, many corporations recognize XBRL as the future of reporting. Although not all regulators require XBRL, it’s already gained significant traction globally as the defacto standard for reporting.
By adopting XBRL, you can eliminate much of the hustle in gathering the data and re-keying reporting frameworks. It has data definitions tagged for every different reporting framework; environmental, financial, carbon, water, etc via taxonomies. In addition, with the right tool, you can automatically generate multiple reports quickly and efficiently reducing your administrative burden.
The Future of Reporting
Major economies across the world are adopting XBRL-based digital reporting. Reshaping how organizations use financial information is possible by adopting XBRL – from accessibility and accuracy of financial information and increased usability to enforcement of regulation and more comprehensive analysis of financial reports.
Financial reports are becoming increasingly complex, and structured data provides one solution to making reports more accessible for all users. Digitization opens up the future from the known and proven advantages of introducing digital financial reporting, based on XBRL, to looking at interesting applications.
XBRL provides transparency and better insights into the marketplace and supports more meaningful financial reports in regulatory filings. In addition, the automatic processing of the reported disclosures for analysis is possible by using software to reach the machine-readable structured data language.
XBRL for Future
Increasing the use of technology is not the only reason for using XBRL for digital reporting. The several benefits it provides to your organization are very useful for better functioning in the future. Some of them are –
- Benefits to a large number of users
From stakeholders in your business to government agencies and investment analysts, anyone who analyses or compares data can benefit from XBRL. Moreover, since it makes information more readily accessible, it will help users with quick functioning in the future.
- Reduces manual data entry needs
By reducing the need for manual processes, XBRL saves time for organizations. Another important aspect is that it reduces the risk of data entry errors. Thus from the future point of view, XBRL improves effectiveness while saving time.
- Useful for all types of data
Since XBRL is a language for communicating reporting data, it’s not restricted to financial reporting only. Organizations can efficiently use XBRL for their non-financial reporting as well. Thus, they can switch to XBRL for their entire future reporting.
- It is cost-effective
Reducing costs in every possible way is the primary aim of every business, and XBRL supports cost reduction in many ways. Also, the falling XBRL compliance costs make it better for the future.
Semansys can you help you work more efficiently to address your regulatory reporting needs. Contact us today!