PART FIVE

IFRS + XBRL = driving change

TIPS FOR READERS

The usefulness of IFRS and XBRL is proven, especially when the two standards are partnered for the purposes of generating better business reporting. In effect, great strides were made in relation to improving the integrity, construction, distribution and comparativeness of business reports. However, there are obstacles to further advancement. As such, these impediments must be addressed and removed to ensure that more progress is made in the realms of IFRS, XBRL, and resultant business reporting.

Summary

In concluding our journey of discovery, we finalise our understanding of IFRS and XBRL, paying particular attention to the issues and obstacles that hamper progress of acceptance and implementation in both cases. Additional, topical issues are also presented. This part, therefore, provides critical commentary as to what is in the way of driving necessary business reporting change further, and faster.

Target audience

The overall concept map shown in the introduction indicates the necessary breadth and depth of elements contained in this book, which play a fundamental part in supporting current and expected thoughts of a new reporting paradigm. Accordingly, we can see that the various sections of this book are likely to be of particular significance to some people more than to others.

Readers who are expected to have an affinity with, and interest in, Part V of this book include:

• accounting practitioners
• developers of business reporting
• deliverers of business reporting
• standard setters
• IT professionals
• auditors
• senior executives
• senior bureaucrats
• general public
• finance professionals
• academics
• students
• company directors
• government officers
• politicians
• government ministers
• CSR supporters.

Note: Here, CSR denotes corporate social reporting, as well as corporate social responsibility.

PREAMBLE

As indicated in the preamble to this book, IFRS and XBRL are key components of business reporting today. These two elements of the finance and accounting world, when properly partnered, have the undeniable capacity to drive change at the micro and macro level, whether in business entities and public ­organisations, or at the more aggregated plane where an entire economy can enjoy improvements.

Without question, IFRS has achieved a consolidation of global standard setting for financial reporting. Numerous countries had their own professional private standard setters, or standards were set by legislation. Even so, worldwide adoption of IFRS encouraged related organisations to focus standards-setting influence on a global basis. Examples are International Public Sector Accounting Standards (IPSAS), International Auditing Standards (IAS), ­International Valuation Standards (IVS) and newer initiatives, such as the Global Reporting Initiative (GRI).

Another interesting trend will be the extent to which countries will base income tax regulations upon IFRS. Some countries have already started. In that regard, the benefits for IFRS would be better alignment of valuations (relating to transfer pricing), enforcement, in addition to audit efficiencies, as well as improved understanding of taxation processes and tax-related education. Additional benefits, of course, will arise from increased use of XBRL, particularly in relation to the submission of tax returns.

IFRS and XBRL is the perfect marriage, as is apparent to those who are already adherents, and users. Most noticeably, considerable progress is evident, particularly in relation to specific development, general acceptance and pivotal implementation of IFRS and XBRL. Therefore, we should see significant gains as a direct result. In fact, that has been the case in a number of significant areas where early movers proved the ideals of that union in committing the necessary passion, direction, resources and management to the task of implementation, as well as to ongoing operations. Yet, at a macro level, that has not happened to the fullest extent, for assorted reasons.

Clearly, IFRS are fundamental to the integrity of business reporting, within any country and also internationally. XBRL is the way by which such reports are able to be developed and delivered in an exceedingly reliable and rapid manner. These key conclusions are not debated; the extensive acceptance and implementation of both initiatives attest to that fact.

But the ideal scenario, of universal acceptance and implementation, has not occurred. This comes down to a number of issues that can have a negative impact upon the rate of acceptance and implementation of both IFRS and XBRL, as summarised next:

• inadequate funding and other resources;
• national accounting standards versus IFRS;
• partial acceptance of IFRS;
• slow expansion of IFRS;
• slow expansion of XBRL taxonomy;
• inadequate enforcement of IFRS.

In this regard, clearly, the key issues for consideration are:

• the need for increased acceptance of IFRS;
• the need for increased acceptance of XBRL.

We consider each of these in turn.