Questions, Questions Questions!
Can XBRL support greater effectiveness in monitoring and transparency of our financial institutions and multi-nationals?
Let’s indulge in a bit of what if. If Lehman brothers published in financial statements in XBRL, could their collapse be avoided? Would scrutiny from multiple quarters made any difference?
Could an ever increasing position in CDO (Collateralised Debt Obligations) created from sub prime mortgages been identified as a risk if RBS financial statements were in XBRL. On there own probably not, but cross referencing these figures against other data? Who knows? Prescience is for mystics. Financial professionals have analysis and statistics; the quality of both depends upon levels of transparency/availability of information.
Why do we need greater transparency?
Greater Transparency either mandatory or voluntary in order gain trust is something that we can expect from publicly listed companies.
Especially in light of recent economic conditions with financial institutions facing even greater scrutiny.
A key feature of XBRL as promoted by the IFRS, “to standardize financial reporting to promote transparency.”
The United States (SEC) have not only made it mandatory for publicly listed companies to submit financial statements in XBRL, but have made them public.
Allowing investors, researchers and analysts the opportunity to assess the performance of these companies using an IT system that can analyze the data will be creating growth in financial analysis software applications that support XBRL.
The question is how many other regulators in other countries will follow the United States SEC’s lead in light of benefits of greater transparency?
But what about companies? What is the uptake of companies releasing financial information in XBRL to the general public? Companies such as Goldman Sachs and Apple have done just that.
Once again, will the demand of greater transparency from investors drive demand?
What will be the role big data analytics play in a potential revolution?
Time will tell…