Academic Study Shows Investor Acceptance of XBRL Technology

A group of academics studying XBRL acceptance have determined that investors are warming up to using XBRL-enabled technology to do their research and make investment decisions. In their study of the effects of exclusive technology choice on the analysis of financial information, a trio of accounting professors found that 66% of non-professional investors chose XBRL-enabled technology to complete a financial analysis task because they perceived it would reduce the time it would take for them to complete the task.

The 34% of nonprofessional investors who chose spreadsheets over XBRL-enabled technology said they preferred it because of prior experience they had using that technology. No one in the study chose document exchange software, such as PDFs, to complete the task. These findings have implications for the technology choice literature, regulators mandating or considering mandating XBRL-based reporting, and XBRL-enabled technology adoption.

To learn more, read the June 2011 SSRN research article, XBRL-Enabled, Excel or PDF? The Effects of Exclusive Technology Choice on the Analysis of Financial Information, by Diane Janvrin of Iowa State University, Robert Pinsker of Florida Atlantic University, and Maureen Francis Mascha of University of Wisconsin-Oshkosh.

XBRL stands for eXtensible Business Reporting Language. It is one of a family of "XML" languages which is becoming a standard means of communicating information between businesses and on the Internet. XBRL is a language for the electronic communication of business and financial data which is revolutionizing business reporting around the world.  It provides major benefits in the preparation, analysis and communication of business information.  It offers cost savings, greater efficiency and improved accuracy and reliability to all those involved in supplying or using financial data.

XBRL is being developed by an international non-profit consortium of over 600 major companies, organizations and government agencies. It is an open standard, free of licence fees. It is already being put to practical use in a number of countries and implementations of XBRL are growing rapidly around the world. The idea behind XBRL is simple. Instead of treating financial information as a block of text - as in a standard Internet page or a printed document - it provides an identifying tag for each individual item of data. This is computer readable. For example, company net profit has its own unique tag. The introduction of XBRL tags enables automated processing of business information by computer software, cutting out laborious and costly processes of manual re-entry and comparison.  Computers can treat XBRL data "intelligently": they can recognize the information in a XBRL document, select it, analyse it, store it, exchange it with other computers and present it automatically in a variety of ways for users. XBRL greatly increases the speed of handling of financial data, reduces the chance of error and permits automatic checking of information.

The XBRL International website provides further information about the nature, uses and benefits of XBRL. It explains how individuals and companies can join the effort to move forward and make use of the language.

Announcing the Investis Online IR Rankings

Investis Online IR Rankings, a unique free feature, aims to help investor relations professionals identify companies that are international leaders in online IR communications. The initial rankings cover major international stock exchanges, including the S&P 100 index of the largest US companies, the FTSE 100 of the largest UK-listed companies, the DAX index of blue chip German companies, the Italian FTSE MIB index, and Finland’s OMXH 25. New indexes will be added in future quarterly updates to eventually cover about 800 companies, which will be reviewed twice per year.

The evaluations are conducted by Investis, a leading corporate website service provider based in London, and validated through random sampling by IR Web Report. Investis has been evaluating corporate websites for its IQ Benchmarking service since 2008. The Online IR Rankings are an offshoot of its corporate website rankings and use an IR-focused scoring system devised by IR Web Report. For more information, see the October 25, 2011 posting “Introducing the Investis Online IR Rankings” by Dominic Jones at IR Web Report online.

Canadian Standards in Transition - ASPE Resources Available

The Canadian Institute of Chartered Accountants (CICA) has recently issued three new resources to help private companies make a smooth transition to the new accounting standards for private enterprises (ASPE).

A Guide to Understanding Transitional Options and Accounting Policy Choices
This guide helps practitioners understand the choices and decisions available under the new accounting standards for private enterprises (ASPE) and provides practical examples and worksheets.

A Case Study: Financial Statement Comparison
This publication presents an example of non-consolidated and consolidated financial statements prepared in accordance with pre-changeover accounting standards - XFI Version, and financial statements restated in accordance with ASPE.

Transition Considerations for a Non-Complex Entity
This summary highlights significant changes in the new standards as well as items that require management consideration. The information, geared to non-complex entities, raises awareness for typical balances on a set of financial statements.

Amsterdam Roundtable on Integrated Reporting

An Executive Roundtable on Integrated Reporting was recently organized by the International Integrated Reporting Committee (IIRC) and Duisenberg School of Finance in Amsterdam. It was one of a series of roundtables hosted around the world to encourage the exchange of views on Integrated Reporting among leaders in business, investment, civil society, accounting and the standard setting community. The focus was on the Integrated Reporting Discussion Paper, Towards Integrated Reporting – Communicating Value in the 21st Century, which was launched on September 12, 2011.

It was noted that Integrated Reporting is about accountability regarding past financial and non-financial performance and providing insight in how a company aims to create and sustain value for shareholders and other stakeholders. Integrated Reporting only makes sense if it is part of an integrated business strategy. It should not be a data collection exercise, just for the sake of reporting. In addition, legislation has a role to play in creating a level playing field for Integrated Reporting. It should avoid being compliance based and rather be designed along the lines of a “comply or explain” approach. A Summary of the Roundtable Discussion is available online.

XBRL International Conference – October 2011

XBRL (eXtensible Business Reporting Language) is transforming business reporting. Does your company seek recognition as a thought leader on XBRL? If you have business interests or plans for business development, do not miss this opportunity to take the stage! The 23rd XBRL International Conference: "XBRL23:  Enhancing Business Performance" is produced by XBRL International, Inc. and hosted by XBRL Canada. The Conference will be held on October 25-27, 2011 at Le Centre Sheraton, Montreal, Canada.

XBRL is an XML-based, royalty-free, open standard for business reporting. XBRL was developed by XBRL International, a not-for-profit consortium of leading companies and organisations around the world. For more information about the XBRL standard,  visit the XBRL International website. XBRL Canada conducts seminars and webinars for companies and individuals wishing to learn more about XBRL. Currently, it is also working on projects to assist companies with convergence to IFRS.

Losing the excess baggage - reducing disclosures in financial statements to what's important

The Institute of Chartered Accountants of Scotland (ICAS) and the New Zealand Institute of Chartered Accountants (NZICA) have undertaken a project for the International Accounting Standards Board (IASB). The joint project is to review International Financial Reporting Standards (IFRS) disclosure requirements, to remove much of the detailed information in financial statements so that they can focus on what is important.



Following the Group's detailed review of financial reporting standards, the paper recommends enhancing the use of materiality in financial reporting disclosures and deletion of many disclosure requirements that do not contain material information. It is expected that later this year the discussion paper and its recommendations will be issued by the IASB for exposure and comment. Read the July 2011 paper, Losing the excess baggage - reducing disclosures in financial statements to what's important.

Interim Reporting Under IFRS — An Update

CPR Alert (Issue 14, July 2011) is a non-authoritative bulletin prepared by staff of the Canadian Performance Reporting Board (CPRB) at the Canadian Institute of Chartered Accountants (CICA). This issue, Interim Reporting Under IFRS — An Update, reviews: Filing deadlines – no extension for Q2 and Q3; Items to include in Q2 and Q3 2011 interim financial reports; Auditor review of interim financial reports; MD&A considerations for Q2 and Q3 2011; and Classification of bankers acceptances under IFRS. In addition, the Ontario Securities Commission published IFRS Release No. 3 – IFRS Interim Financial Reports –Tips For Q2 And Q3 on July 7, 2011. That release provides a useful filing tip sheet for Q2 and Q3.

That's Summa Story - From the Caves to Cafe Pacioli

Accountants are generally recognized as making a valuable contribution to society, by providing the information that allows entrepreneurship to flourish, business to operate efficiently, stakeholders’ interests to be protected, shares to be fairly priced, and taxation and audit requirements to be satisfied. Accounting, however, has not always enjoyed such an established position, and today there is often a tendency to take the profession’s status for granted. It is interesting, therefore, to examine the factors that have brought accounting to the preeminent place that it occupies today.To learn more about the history of accounting, read the article "That's Summa Story! From the Caves to Café Pacioli" by Derry Cotter, FCA. To access the full text of this article, see the Digital Edition of Accountancy Ireland, February 2011, (pages 50-53).

Using electronic communications between CA firms and clients

Almost all CA firms are communicating at least some information to their clients electronically, according to the CICA’s most recent Managing a Public Practice (MAPP) survey on computerization. Nearly all firms represented in the survey send e-mails (99%), PDFs (96%) and other correspondence (93%) to their clients electronically. Four out of five firms (80%) send corporate tax returns to clients electronically. Personal tax returns (82%) and financial statements (87%) are also sent electronically by more than 80% of firms. The results are from a broader three-part MAPP CA practice benchmark survey conducted biannually with the partners of CA firms across Canada. (Read the article “Electronic Update” at CAmagazine online.)

Canadian regulator issues guides on IFRS

The Ontario Securities Commission (OSC) has issued two high-level guides on the impacts of IFRS: Deciphering IFRS - What Analysts Need To Know About IFRS Transition and Investing in the New Era - What Investors Need To Know About IFRS Transition. The guides outline a number of questions for analysts and investors to consider and are available on the OSC website.

CEO Round Table - What do the leaders of the top seven CA firms think about key issues?

In December 2010, Kevin Dancey, president and CEO of the Canadian Institute of Chartered Accountants (CICA), hosted a round table discussion with the CEOs of the top seven accounting firms. The discussion covered a wide range of topics of interest to the profession. Participants included Chris Clark of PricewaterhouseCoopers, Keith Farlinger of BDO Canada, Trent Henry of Ernst & Young, Alan MacGibbon of Deloitte, Phil Noble of Grant Thornton, Daryl Ritchie of Meyers Norris Penny and Bill Thomas of KPMG. Also present was Bill MacKinnon, chairman of the CICA. Read what these leaders had to say about key issues in the article "CEO Round Table" at CAmagazine online.

FEE Factsheet on Integrated Reporting

Debates and developments around the concept of “integrated reporting” are growing in importance. According to the FEE (Fédération des Experts-comptables Européens - Federation of European Accountants), “integrated reporting is a holistic approach to enable investors and other stakeholders to understand how an organisation is really performing. Addressing the wider as well as longer-term consequences of decisions and actions, an integrated report makes clear the link between financial and non-financial value. The relationship between an organisation's strategy, governance and business model should be transparent through such reporting. It also gives an analysis of the impacts and interconnections of material opportunities, risks and performance across the value chain.” The FEE represents 45 professional institutes of accountants and auditors from 33 European countries, including all 27 EU Member States. (Read the FEE Factsheet on Integrated Reporting.

Upcoming Canadian IFRS Survey: Stay Tuned

International Financial Reporting Standards (IFRS) are changing at a rapid pace and companies can expect to see new standards effective as soon as 2014. The International Accounting Standards Board (IASB) intends to improve financial reporting information for investors while also aligning US and international accounting standards. Are you aware of the proposed changes? How ready are you for these changes? PricewaterhouseCoopers (PwC) will soon be conducting an open survey on some key expected changes to IFRS and what Canadian companies think the potential impact may be. The survey will be sent to all IFRS News subscribers and will be accessible from the PwC website.

Estimating the Fair Value of Investments

In September 2006, the US Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) 157, Fair Value Measurements (now Accounting Standards Codification [ASC] section 820-10, Fair Value Measurements and Disclosures), with the stated objective of simplifying the measurement and disclosure of fair value information. The application of this guidance to investments in certain nonpublic entities, such as alternative investments, proved more difficult than originally envisioned. Read the CPA Journal article "Estimating the Fair Value of Investments in Entities that Calculate Net Value Per Share" in digital format.

Effective IFRS communications with stakeholders

Effective communication cannot happen without an understanding of the needs of the audience. In preparing the first IFRS interim reports, adopters should try to look at the information through the same lens as the people who are seeing it for the first time, most of whom are on a steep IFRS learning curve. Will the readers of those reports be able to discern whether changes are a reflection of business performance or the new standards? Helpful resources can be found on the CICA’s IFRS website including: (1) IFRS Financial Statements – Examples: A sampling of interim IFRS financial statements provided by first-time adopters. (2) Meeting Regulatory Requirements: A web page that provides OSC guidance on MD&A disclosure, including a publication called Ontario Securities Commission Issuer Guide: Top 10 Tips for Public Companies Filing Their First IFRS Interim Financial Reports. (3) A Review of 2010 Financial Statement Disclosures and What to Expect in 2011: An audio/slide presentation that discusses how financial analysis will be different in an IFRS world. The CICA is providing free access to this recording. Other useful IFRS audio presentations are available at the CICA Xtensions Learning Centre.

Keeping your head above water… Recent issues in financial reporting

PricewaterhouseCoopers (PwC) Canada has published its latest Financial Reporting Release dated January 2011. The publication is called Keeping your head above water… Recent issues in financial reporting. Topics covered include: Transitioning to IFRS; Rate-regulated Accounting; Investment Companies; Recent IFRS Developments Affecting Transition; Debt Covenants under IFRS; Global GAAP Convergence; Financial Instruments; Hedge Accounting; and Life after Convergence. (To download previous editions of this publication, visit the PwC Canada website.)

Quarter-end financial communications guidance provided by Canada’s CAs and CIRI

The Canadian Institute of Chartered Accountants (CICA) and the Canadian Investor Relations Institute (CIRI) have teamed up to produce a new publication entitled Quarter-End Financial Communications - Content to Consider, that offers some brief observations to assist management in preparing its summarized financial communications. (Read the CICA Press Release.)

Financial Reporting in Canada under IFRS - First-time Adoption of IFRS

The move to International Financial Reporting Standards (IFRS) is a major challenge for everyone involved in financial reporting in Canada: preparers, users, practitioners, professors and students. The CICA Guidance and Support Group have prepared the 2011 edition of Financial Reporting in Canada under IFRS as a primer for understanding and applying IFRS. Chapter 20 of the publication provides guidance on the First-time Adoption of IFRS. Additional resources are available on the CICA’s Transition to IFRS website.

Business Redefined: Global Trends that are Changing the World of Business

In 2010 Ernst & Young published a report called Business redefined: a look at the global trends that are changing the world of business. It provides an in-depth look at the six most influential trends that will redefine business success, highlighting the key questions that business leaders should be asking themselves right now. The way that business leaders plan for — and respond to — these trends over the next decade will help determine who the market leading companies of tomorrow will be. The report highlights six key trends: 1. the rise of emerging markets; 2. increasing focus on resource efficiency and climate change; 3. the transformed financial landscape; 4. increased role of government in the private sector; 5. the next evolution of technology; 6. fostering a global workforce in dynamic times.

CSA - Continuous Disclosure Review Program for March 31, 2010

Canadian Securities Administrators (CSA) have issued Staff Notice 51-332 Continuous Disclosure Review Program Activities for the fiscal year ended March 31, 2010, which summarizes the results of the CSA’s continuous disclosure (CD) review program. The number of reviews (1,351) represents a 23% increase from fiscal 2009 when the CSA conducted 1,094 reviews. The main reason for this increase was the completion of International Financial Reporting Standards (IFRS) transition disclosure reviews. To assist reporting issuers, Staff Notice 51-332 includes detailed examples of the common deficiencies found during the reviews in financial statements, Management’s Discussion and Analysis (MD&A) and oil and gas disclosure.