Despite these advances, CFA Institute, which represents investment professionals around the world, believes that today’s financial reporting system has a long way to go in adopting technologies that will make data more helpful to users.
It says current reporting requirements still presume that humans consume the information, and much of the annual report is not in a machine-readable format, which would be more useful. One major improvement, it suggests, would be for preparers to structure data at an early stage in the reporting process, rather than adding tags later.
Mohini Singh, CFA Institute’s Director of Financial Reporting Policy, says she welcomes regulators’ emerging support of inline XBRL (iXBRL), a process that supports early structuring by allowing preparers to incorporate XBRL tags into an HTML-formatted financial statement, rather than filing a separate XBRL document.
But she adds that there is still an urgent need for education. “We surveyed our members in September 2016 and 90% said they were not familiar or not up to date with XBRL,” she says. “I think they are using the data, but they just don’t know it is XBRL data.
“Often, that is because of the many problems with the quality of data being filed [in some countries]. Where the data isn’t clean, data providers are having to clean it, which makes it costlier.”
Toomse-Smith adds that the introduction of the European Single Electronic Format will also have a major effect. From 2020, this will require all European Union listed companies to produce their annual reports in Extensible Hypertext Markup Language (XHTML) with tagged primary statements. “This will mean that data is more accessible and usable, and could lead to innovation in this space,” he says.