In July, Australia adopted what it calls "Standard Business Reporting" (SBR), which is designed to reduce the reporting burden imposed on businesses by the country's federal and state governments by streamlining the information submission ("lodging" for the Oz) process. In essence, the country is on its way to a file-once-use-many approach whereby companies provide data using a single secure sign-on known as "AUSkey" As of now, SBR reports include the Business Activity Statement, Tax File Number Declarations, payment summaries, payroll tax returns and financial statements. While the data can be compiled manually, the objective is to have SBR-enabled software to pre-fill and complete government forms directly from their own accounting and other business systems. The Australian initiative has been in the works for several years and appears to be off to a good start.
I expect that something like SBR's comprehensive approach will be adopted in many countries, although I don't expect the US will be at the forefront and may lag because of scale (Australia has 21 million inhabitants, half the population of California alone) and complexity reasons. This is especially true for state governments a majority of which (I believe) would be judged to be in some sort of "laggard" classification for the maturity of their IT systems and their management of data.
The key, of course, is eXtensible Business Reporting Language (XBRL), which because of its inherent modular design and ability to (relatively) easily grow and develop in response to changing requirements, is well suited to the needs of formal, external communications between businesses and entities to which they routinely exchange information. This is already the case for bank regulatory reporting in many countries (which is a relatively straightforward set of data) and securities filings (which can be quite complex). The hardest part in establishing an XBRL reporting program is defining the taxonomy. Yet, any government form readily adapts to being translated into a taxonomy and changes tend to be evolutionary.
As of now, over 105,000 "AUSkeys" have been issued and there about 2 million actively trading businesses in Australia or roughly 5 percent of the total. This is probably viewed as an encouraging start but the real issue is how quickly the country will get to 35% penetration, since that is a point where it will have achieved critical mass to sustain longer-term high levels of adoption.
If they are not already capable of doing so, ERP, accounting, tax and HR software vendors will need to adapt their packages to enable them to create XBRL-tagged reports tailored to the specific geography to the standards of the moment (and facilitate changing these over time as requirements change).
This sort of periodic reporting is not confined to governments. Companies that have loans or leases with banks, insurance companies and other financial services companies often are required to submit financial statements. As of now, there is a great deal of manual effort necessary to submit them. Most of the institutions that receive have manual or only semi-automated methods to processes them and then make limited use of the data they spend too much to receive.
XBRL has progressed from a perennial "next big thing" disappointment to a phase of slow but steady adoption. I think it will be a while before it hits an inflection point. We'll know it has when it becomes a topic mentioned more than once a year in a general business publication. Or not. After all, it's nearly impossible to find "XBRL" anywhere on the Australian SBR website.
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Robert D. Kugel - CFA - SVP Research