GRI / Deloitte XBRL Taxonomy for Sustainability Reporting

XBRL stands for eXtensible Business Reporting Language. It is one of a family of 'XML' languages and is machine readable. Use of XML language allows sharing not only the data, but also the format that is used for presenting the data. Machine readable means that computers can recognize various elements of the report and process it without manual labor. Computers can recognize the information in an XBRL document, and select, analyze, store, and exchange it with other computers. XBRL data is set out in taxonomies – data classifications that are defined by industries and organizations for their reports and communications. XBRL information can be presented automatically in a variety of ways.

The Global Reporting Initiative (GRI) Taxonomy, developed in collaboration with Deloitte, is one of the first XBRL taxonomies for sustainability reporting. It will help investors, auditors and analysts to access information in sustainability reports faster, and more simply. An XBRL taxonomy is an industry-specific categorization scheme that defines and 'tags' data in relation to its purpose, framework or outline. It enables users to uniquely tag and identify individual detailed reporting elements which can be easily shared electronically. In the case of the GRI Taxonomy, data can be tagged following the GRI Guidelines.

The new GRI Taxonomy enables organizations to tag their sustainability data in reports. This will help report users – including regulators, investors and analysts – to find and analyze sustainability information. Organizations can benefit from a well-defined structured format for collecting and disseminating sustainability information. It enables reporters, analysts, regulators and others to exchange sustainability data electronically and inform stakeholders with consistent and high quality information.

For more information, see the GRI frequently asked questions webpage. Reporters who use the GRI Taxonomy are asked to participate in the Voluntary Filing Program.

COSO Internal Control - Integrated Framework

In November 2010, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) announced a project to review and update the 1992 Internal Control - Integrated Framework. COSO’s goal in updating the framework is to increase its relevance in the increasingly complex and global business environment so that organizations worldwide can better design, implement and assess internal control.

COSO engaged PwC as author of the update. In turn, PwC received valuable input from the Advisory Council and other stakeholders. The proposed Framework retains the core definition of internal control and the five components of internal control. A significant enhancement is the expression of concepts described in the original framework as 17 principles, accompanied by related attributes. These principles and attributes should assist organizations as they apply judgment in improving performance and managing risk in changing business and operating environments.

This Framework will provide organizations with significant benefits – for example, by increasing confidence that controls mitigate risks to acceptable levels and by providing reliable information to support sound decision-making. Furthermore, because the definition of internal control and its five underlying components are not changing, the codification of the principles and attributes will not impose additional burdens or a higher threshold for designing and maintaining an effective system of internal control.

COSO is now seeking feedback comments on the proposed Internal Control - Integrated Framework. A series of questions are included in the exposure draft for consideration by participants. The comment period closes March 31, 2012.

US Congress is Keen on XBRL

As an early champion of XBRL, the American Institute of Certified Public Accountants (AICPA) has developed a number of resources to assist those who create XBRL files, as well as those who review or use XBRL. The XBRL resource page provides the history of XBRL, links to articles and guidance.

XBRL.US also has useful tools and resources. It states that: “XBRL, eXtensible Business Reporting Language, is a royalty-free, international information format designed specifically for business information, also referred to as ‘interactive data’ by the SEC. The idea behind XBRL is simple: instead of treating business information as a block of text – as in a printed paper document or a standard Internet page – it provides a unique, electronically readable tag for each individual disclosure item within business reports.”

A recent article at AICPA Insights online notes that the “US Congress is Keen on XBRL” and has introduced H.R. 3339, the Standard Data and Technology Advancement Act, or the “Standard DATA Act.” The bill aims to establish consistent requirements for the electronic content and format of data used in the administration of key human services programs. Specifically, it calls for the incorporation of existing nonproprietary standards, such as XBRL. If enacted, this bill would improve the collection and dissemination process for the federal government by standardizing data and eliminating time-consuming and error-prone manual processes.

Another bill entitled the Digital Accountability and Transparency Act, or “DATA Act,” H.R. 2146/S.1222 is also under consideration in Congress. The DATA Act calls for the use of consistent government-wide data standards for all federal spending. This bill also calls for the use of a nonproprietary data reporting standard, such as XBRL. The DATA Act is currently awaiting debate and a vote on the House floor.

Update and Current Perspectives on Integrated Business Reporting

The International Integrated Reporting Council (IIRC) has published the responses to its Discussion Paper, Towards Integrated Reporting – Communicating Value in the 21st Century. More than 215 responses submitted to the IIRC are available online, alphabetically, through the drop-down menu under the green Discussion Paper tab. The IIRC plans to publish a summary of comments by the end of March 2012.

So far, 61 companies have agreed to participate in the Pilot Program to test a new integrated reporting framework as it is developed. There are still opportunities to participate in the Program, especially for companies in North America, South America and Asia. The IIRC is also establishing an Investor Network, which will help shape integrated reporting to meet investors' needs.

Nick Ridehalgh, a senior director with KPMG, says integrated reporting is a chance for CFOs to drive change management by showing they understand the short-term, medium-term and long-term goals of the business and communicate better with the capital markets. Watch the video “Why adopt integrated reporting?” at The Australian Financial Review online.

In addition, PwC in the UK recorded a live webcast called “Business reporting in this economic environment: What to action now and consider for the year ahead” to help identify what makes good reporting. The live webcast aims to share insights on issues for management and the board, to explain what investors want to see in the annual report, and to look ahead at what is likely to change.

With market confidence shaken, there has been a positive response from investors and regulators to those companies that provide some additional, pertinent disclosures to help reassure the markets. This means demonstrating that the critical business issues, such as securing funding for borrowings, acquisitions or capital projects, are being effectively managed. It means inspiring confidence in the business model and its resilience in this economic environment. And, it means building trust in the appropriate governance of the business. The webcast looks at some of the important issues that the board and audit committees are focusing on as they sign off on annual reports.

Who’s Out There? CFOs can’t ignore social media. But what’s the ROI?

The power of social media — or, at least, its potential power — is not lost on American companies. Many are using it successfully for everything from new-product marketing to employee collaboration to innovative and very effective forms of customer service. But, most companies are struggling to turn nascent, ad hoc efforts into something resembling an actual strategy.

Clearly, social media engages enormous numbers of people: how else to explain how Starbucks got 8,006,349 Facebook “likes” (as of early December 2011) for its Frappuccino. More broadly, the numbers on social media adoption are spectacular. As of December, Facebook claimed 800 million active users worldwide, with 50% logging on every day. Twitter reported an average of 460,000 accounts created per day late last fall, with an average of 1 billion tweets per week. As of November 3, 2011, LinkedIn had 135 million members in more than 200 countries; two new users join every second.

That action is not just limited to consumers. A survey of 4,261 global executives conducted by McKinsey late last year found 72% reporting that their companies deployed at least one social technology. A November 2011 Towers Watson study of 604 global organizations found 69% planning to increase their use of social media tools over the next 12 months.

Read the full online article “Who’s Out There?” at CFO.com. For additional insight, refer to the CICA Practical Guidance Series, especially Using the Internet in Corporate Reporting: Practical Guidance for Managing Web 2.0 and Social Media. Also, see the four-part series on Using the Internet in Corporate Reporting (Part 1, Part 2, Part 3 and Part 4).