Earlier this week XBRL International’s Rendering Working Group published the Proposed Recommendation for Inline XBRL. The standard is now on a track which will reach Recommendation by the end of March, in good time for HMRC’s Corporation Tax filing service to go live in the autumn.

Inline XBRL – or iXBRL – will be required for most of the Corporation Tax returns after April 2011. And, down the road, we expect Companies House to mandate iXBRL for filing of Accounts. What will this mean for the companies who have to file ?

I don’t think that the UK is going to see joint filing – making a single filing which will handle both Companies House and HMRC obligations in one go – for some time, if at all. Current legislation provides different filing dates for the two agencies and different filing content. Thus, for instance, companies which are allowed to file Abbreviated Accounts with Companies House will generally need to provide full income statements to HMRC.

But Inline XBRL does provide a neat way to simplify the filing.

Inline XBRL is an HTML document – a web page, if you like – which contains extra information, the extra information that you need to convert the data you see in your browser into an XBRL report. But financial reports are sometimes so large that they won’t fit into a single HTML document. So an iXBRL filing is allowed to consist of, potentially, a series of related HTML documents. This complete “document set” is used by the government agency to generate a single XBRL report.

Inline XBRL doesn’t mind much what goes into each part of the document set, so long as all the information is there. Equally, it doesn’t stop individual components of the document set from being complete document sets in their own right. In simple terms, iXBRL document “A” might be an income statement, and iXBRL document “B” might be a balance sheet. Together they would represent the full Accounts required by HMRC. Document “B”, on its own, would represent the Abbreviated Accounts required by Companies House.

In a world where major accounting firms routinely download clients’ Accounts from Companies House to make sure they have the correct version when preparing the tax return, the ability to use a single document set for different purposes is an important aid to clarity and accuracy.

So now the hard work really begins. The SEC’s decision today to require
registrants (ie: companies with listed securities) to start filing their
financial statements in XBRL format is pretty similar to the proposed rule
announced in the middle of the year. As widely expected, there is a slip in the
timing. It will start for company filings (quarterly or annual) as from 15 June
2009, ie: 2009-Q2 10Qs instead of the larger and harder 2008-Q4 10Ks as
originally anticipated. They’ve also pushed back the timing for the roughly
8,000 mutual fund risk/return summaries to 1 January 2011, instead of the
middle of 2009.

The Commission is not unanimous on the liability arrangements. Commissioner
Aguilar is voting against the entire proposal because he wants the liability
and the assurance arrangements contained in the proposals greatly
strengthened.

For what it’s worth, I think that the liability carve-out arrangements are an
attempt to ease the transition costs – the change management involved in a
complex new technology – and the SEC (particularly the Chairman) are relying
on new SEC leadership to reinstate them. We need to wait for the final rule to
see the details, but there appears to be a phase-in arrangement for liability
(and therefore assurance) in any event. This should be a relief for a lot of
auditors.

Commissioner Aguilar is pointing out that the current economic climate is the
exact moment at which the regulator could simply reject the need for a
carve-out. Since the requirements for audited financial statements in ASCII or
HTML are not going away, and the liability and assurance arrangements for them
remain, I suspect the issue is almost moot.

However, I think, from an accuracy and consistency perspective, we should be
looking for XBRL filings to be in iXBRL (embedded inside web pages) format.
This should happen very quickly and at that point, the liability arrangements
must be uniform. Cox seems to have made this point, right at the end of
the meeting.

A number of the other details will be in the rule. Final SEC rules tend to be
published a week or so after these open meetings. Stay tuned.

I think this decision today is much bigger than most people realise. Thanks and
congratulations to the SEC, particularly Paul Wilkinson, Jeff Naumann, David Blaszkowsky and (more recently) Walter Hamscher, all those involved in the US
GAAP XBRL taxonomy project at XBRL US under Mark Bolgiano and Campbell Pryde,
as well as the extraordinary international collaboration that XBRL continues to
represent, especially at XBRL International.

Ever sat in a traffic jam in the evening, on a road that is narrowed by a lane filled with orange cones and silent bulldozers, as the workers have all gone home? I sit there fuming, calculating in my head the cost of all the additional fuel that is being burnt by cars moving at a snail’s pace, plus the average cost of everyone’s time. Surely, if government was "by the people, for the people", the cost/benefit analysis for work on major roads would include those costs. The result would be that an awful lot of road work would happen 24×7.

The reality is that not that many parts of government work in a way that takes account of people’s time and money. But here’s an area that does: S.B.R.

Standard Business Reporting projects are based on the unusual notion that government should change the way that it works so that things are just a little bit easier for the private sector. We’ve recently added the Australian Government’s SBR project to our list of major clients. Their counterparts in the Netherlands have been important customers for some time.

What are they up to? They are working across government agencies, and even across levels of government, harmonising the way that business reports to government. The problem is that government is complex, and it needs lots of information from the private sector in order to be able to operate. But the provision of that information is complicated, burdensome and duplicative. How burdensome? Well, according to the SBR projects’ analyses, about 2.5% of GDP in most countries is devoted to compliance costs. Two point five per cent??? That’s USD48 Billion in the UK, or a gobsmacking USD333 Billion in the USA. In the Netherlands and Australia, both countries are dealing with smaller economies, with the burden in the order of USD12 Billion each, and both looking to save around 8% of that. Which is still really worth doing.

So, SBR aims to shave a bit of that burden down. Even small improvements, when you are talking international telephone numbers, really help!

How many government initiatives can say that they are working to save taxpayers hundreds of millions without cutting back on the services being provided?

As one senior official in the UK put it recently, rather than dealing with the symptoms of duplication and complexity, for instance, by trying and often failing to create cross-governmental databases, SBR aims to deal with the root of the problem, by getting different agencies to agree on definitions. This results in the construction of a single set of structured requirements that are much easier for small, medium and large businesses to comply with, and (crucially) for their accounting software to report with. The technology behind these initiatives? You guessed it: XBRL.

You can find more information about SBR on the Dutch and Australian websites. Stay tuned. These projects are worth doing.

It’s a very real pleasure to welcome Tony Fragnito to the XBRL consortium. Tony started in his new role as CEO on Monday, although he attended the international conference last month where he was introduced to the deep end of the pool. Tony brings a formidable set of skills and terrific experience in managing associations. His initial statements about priorities and improvements to the professional capabilities of XBRL International are a breath of fresh air.

A month has passed since the Munich XBRL conference and for some reason the slides have not yet been posted. I’ve had a few requests for my talks, so here they are.

Michael Ohata and I gave a joint talk about XBRL International, with my section on the background to and current priorities of the Standards Board. I’m going to write some more about that elsewhere in the near future, but for the moment, here are the slides (PDF).The bottom line is that while we have a terrific community, we still need more volunteer experts who are responsible for XBRL technology inside their own shops, simultaneously working inside the consortium to help improve the level of testing and review that is conducted on modules that cover requirements such as versioning, formula and rendering.

Ralf Frank (who is the very articulate MD of the DVFA) and I co-chaired a day and a half long session on External Reporting. The track brought together professionals that work with business reports from a number of perspectives (exchanges, analysts, infomediaries, credit ratings agencies and the audit profession). I spoke about managing expectations in an XBRL-enabled world. Today the first thing that investors see (and that the entire process is geared around) is EPS. The day you get an entire earnings release marked up in XBRL you can do a lot more analysis than has ever been possible in the past. Sorry about the lack of beer – but I got your attention, didn’t I? Drop me a line if you want to discuss, disagree, or explore.

Great presentation and demonstration from Piero Milani from Infocamere about BRITE, which is an EU funded effort to bring the Business Registrars of Europe together. The mission is to establish a framework for the interoperability between the Business Registration Authorities of Europe.

The project that Piero was talking about is a pilot that they have developed with the assistance of Adobe. Full disclosure: using CoreFiling technology to make the XBRL part happen. The problem that Piero and his colleagues have been tackling is to do with government and local authority procurement. One of the requirements in most official tenders is for tenderers to provide proof (available only from their company registrar) that they have the appropriate legal standing and, further, that they have a certain amount of revenue or assets available to them.

The problem is that there is a different company registrar in each of the 27 states (that’s countries for our North American readers) of the European Union. And something like 18 official languages. So how does a company in Sweden bid for work in Italy and not be indirectly discriminated against, because the government agency in Italy doesn’t know anything about the legal situation (or the language) in Sweden?

Their proof of concept (covering 5 countries at present) is a good example of collaboration and a great example of the type of problem that interactive data, supported by agreed and well-defined metadata can solve. And this is a very different environment to the typical XBRL examples you’ve probably heard.

A number of company registrars across Europe, including in Italy, are mandating or offering a mechanism to allow small companies to file their accounts in XBRL. Companies House in the UK have received more than 100,000 such filings in the first year of the operation of their system to accept XBRL-based e-filings.This pilot leverages the availability (or future availability) of that information.

So the BRITE pilot allows a company tendering for some work in a different part of Europe to apply to their own company registrar for a statement about their finances and legal standing. The BRITE mechanism uses an agreed vocabulary (and a single PDF document) that gets filled in by the home company registrar, for provision to the government agency that is running the procurement.

The PDF contains summary information (with labels available in the language of the procuring agency) as well as an official extract from the registrar’s system, proving the legal standing. In addition (this is the really good bit) they provide an extract from the XBRL filing that the tendering company has made and provide that in a read-only form in the PDF. So turnover, profit, assets etc are set out in the form. Click on a drop-down and you can change the language of the labels. Click a button and you can extract the data out in XBRL format.

Simple. Compelling. Solves a problem that exists today. More power to the BRITE project. Congrats!

Yesterday we released a free as in beer, no licencing restrictions copy of our fully featured XBRL taxonomy development platform. Yes folks, SpiderMonkey Personal Version is available for download now. Read the press release here.

Why would we do that? It’s user friendly. It lets users make it easy to build complete, multi-lingual taxonomies. It is full of features that make life easier, including capabilities to unify, or de-duplicate reporting concepts. It’s based an the Eclipse Rich Client Application, and our True North validation and processing engine so it’s rock solid. It’s a great way not just to learn about taxonomies and XBRL in general, but as *the* tool of choice for that task. And we are giving it away?

Well, we are genuinely committed to making sure that XBRL gets adopted right around the world, so this should help out.

We also believe that folk that need a bit of extra help will buy the Professional version from us, in order to get full support, or, for larger operations that need multi-user features and all of the comfort, reporting, audit trails and power that is offered by the Enterprise Version. So this move is not completely altruistic. But I did mention that it’s free, right?

Speaking of Germany, I’ll be back there in a couple of weeks… will you? Have you registered for the 15th XBRL International Conference? I’m involved in the External Reporting track running over Tuesday afternoon and Wednesday (5-6 June). Lots of good speakers, a great panel session and real focus on the challenges and opportunities created for today’s external reporting professionals. Hope to see you there.

Oh yes — and some very cool stuff from CoreFiling.

I was on a panel session at DIRK (the German Investor Relations Society) in Frankfurt yesterday. We were talking about ways and means for German companies to attract international investors, debating a set of thoughtful, and not entirely uncontroversial theses developed by Ralf Frank, the MD at DVFA.

Stefan Jekel, from NYSE, had a great analogy. He made the point that better reporting leads to better liquidity and greater market capitalisation, and had the academic research to prove it. But you don’t actually need all the equations. Stefan points out that to see "information asymmetry" at work, just head on down to your local used car lot. The more information, and more certainty you have about a car, the more you are likely to pay. Simple, but true. Millions of people prove that on Ebay everyday. The auctions that boast context, features, history and explanations do better, for otherwise identical items, than those with the bare necessities.

A good question posed after the session: "If XBRL can help analysts build faster, better and deeper models, and regulators can use it to drive convergence projects that bring accounting rules closer together, why isn’t everyone using it already?". My answer was three-fold: Education, Education and Education. The "enlightened self-interest" required of companies and account preparers to go to the (fairly small, in real terms) effort of publishing XBRL versions of their accounts is logical, but needs people to think at least one step beyond their own outbox.

True, it’s the analysts, bankers, regulators and counter-parties that are the initial beneficiaries of XBRL formatted disclosures, but (a) preparers don’t just produce accounts for publication because the law says they have to, they also produce them in order to gain access to capital; and (b) corporates that have started to think about XBRL in terms of improving the internal reporting and consolidation process quickly understand that the same issues exist outside their own organisational walls.

An interesting day. Thanks to Susanne Minneker and DIRK for bringing the panel together.

You might be interested in looking at, or contributing to, our MicroXBRL wiki.

There have been discussions about rendering around the XBRL consortium for many years and now, inside the consortium, there is an effort to capture them. The problem, from our perspective, is that accountants and report preparers need to be able to make their reports look exactly the way *they* want them to. Providing an XBRL data file together with a file containing a range of rendering metadata isn’t terribly attractive either to the preparer, or to the software vendors that have to support them. So instead, drawing on the ideas of the folk over at Microformats.org as well as the SVG
group (including Jonathan Watt) we are experimenting with a much more direct approach. Publishing XHTML files that render the report the way the user wants, and embedding XBRL tags right inside those files. It’s simple. It meets the major user requirements. It can probably be extended to allow fancier requirements to be met as well. Your input is welcome!