The government looks likely to weigh in behind a new business reporting IT standard.
Associate finance and IT minister David Cunliffe told last week’s XBRL Conference in Auckland that XBRL has many potential benefits for New Zealand and that the Ministry of Economic Development is looking at amending the Financial Reporting Act “and part of the review will be on the methodology of filing [reports] and XBRL”.
A discussion document putting forward the case for XBRL, a financial application of the XML markup language, is likely to be released in the middle of the year.
Cunliffe outlined the potential benefits to New Zealand financial institutions of adopting the standard, such as reduced compliance costs and increased transparency in business reporting.
“At the Companies Office, 98% of companies register themselves online and XBRL is the ideal candidate for use for that.”
Many government entities already use XML, so overlaying XBRL wouldn’t be too much trouble, he says. Government departments using XBRL or looking at doing so include Auckland University, Statistics NZ and the Office of the Auditor General.
Overseas, XBRL is used by several stock exchanges, the British Tax department and Australia’s Prudential Regulatory Authority.
Cunliffe notes, however, that privacy concerns will need to be addressed before government bodies such as the IRD, Commerce Ministry and Companies Office shared financial data on companies using XBRL. He acknowledges other possible pitfalls to using XBRL, such as installation costs, accessibility issues and security concerns regarding the transfer over the web of sensitive information, but says the benefits outweigh the concerns.
Uptake of XBRL in New Zealand has been limited so far, with NZX, formerly the NZ Stock Exchange, undertaking Project First Step, a move to encourage listed companies to use the language.
However, it is likely to get a boost from the annual conference, which was held in New Zealand for the first time and attracted speakers from around the world. These included Masaru Tokita from the Tokyo Stock Exchange, which uses XBRL extensively in its reporting.
XBRL’s origins go back to the late 1990s and the language works by way of meta-tags, like XML. Seamless transfer of financial data, removing the need for currency symbols and other business jargon to be manually recognised by different computers, is the key benefit.
Microsoft, a sponsor of last week’s conference, is heavily behind XBRL and uses it for reporting its own financial results.
Other IT vendors to sponsor the conference included Oracle and Hitachi and the large accounting firms.