eXtensible Business Reporting Language (XBRL) is a tool designed for the digital communication and presentation of financial and business data. It has been developed to allow users throughout the world to easily access timely accurate and relevant financial information from both world-wide and local organisations. However, although internal use and basic forms of digital reporting are commonly accepted – with most people having knowledge of PDF and HTML documents – very few practitioners seem to be fully aware of the benefits of XBRL, according to a study produced by ACCA (The Association of Chartered Certified Accountants) entitled XBRL: the Views of Stakeholders. The main obstacle to widespread use of XBRL seems to lie in the lack of knowledge of the technology as well as the time necessary to learn its functioning and the resources within practitioners’ organisations to undertake its implementation.

In this light, FEE (The Federation of European Accountants) and two of its member bodies, ACCA and Royal NIVRA (Koninklijk Nederlands Instituut van Registeraccountants), recently organised a roundtable called “XBRL – the impact on accountants and auditors” (see press release) to raise awareness on the new tool. It was built on a recently published FEE policy statement that outlines XBRL benefits and what auditors, accountants and other stakeholders will need to do in order to make a success of XBRL and contribute to the current simplification exercise.

In February 2009, the European Commission published a Consultation Paper called: Review of the Accounting Directives: Cutting Accounting Burden for Small Business / Review of the Accounting Directives, which is supportive of an “only once” filing system facilitated by e-government portals and encourages Member States to develop this further.

This is an encouraging step, supported by a European Parliament’s resolution issued in September 2009 calling for the delivery of common reporting standards using a multi purpose format such as XBRL. It is hoped that the new EU Institutions will pursue these efforts.

The business case for XBRL should be made more effectively since it could be extremely beneficial to numerous stakeholders. XBRL has indeed the potential to reduce costs of filing, to facilitate the re-use of electronic data stored, as well as to speed up the preparation and increase the accuracy, integrity and reliability of data. Not only it is time for Small and Medium sized Practitioners to get ready and understand the need to invest in XBRL but it is also important for Europe to take a more harmonised stance regarding XBRL.

It is imperative for the European capital markets as a whole not to be left behind, and to take advantage of the opportunities offered by the next generation of financial reporting technology by promoting a European regulatory framework, similar to the requirements currently put in place in the US.

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