Canadian accounting firms, consultants and software vendors have worked out a set of local terms to help speed adoption of a business reporting language that could improve the electronic handling of financial information.
Like a dictionary of accounting terms, the Canadian taxonomy for extensible business reporting language (XBRL) covers primary financial statements issued in accordance with Canadian generally accepted accounting principles. XBRL came out of an industry consortium more than five years ago to create a standard for financial reporting based on extensible markup language (XML), which uses metatags to more effectively share, analyse and publish information. The taxonomy was necessary because there are certain terms in the U.S. GAAP that aren't included in the Canadian version, and vice-versa.
XBRL is already gaining momentum in the U.S., in part because of a mandate from the Federal Deposit Insurance Corp. that all banks submit call reports with it. Earlier this year the Toronto Stock Exchange set the stage for Canadian adoption by publishing its year-end results using the standard. More than 40 Canadian organizations, including Royal Bank, Public Works and Government Services Canada and PricewaterhouseCoopers have joined a Canadian chapter of the XBRL consortium.
Thomas Taylor, project director for XBRL Canada at the Canadian Institute of Chartered Accountants, said the next step is to create additional taxonomies relating not just to financial statements, but also notes to the financial statements and management's discussion and analysis of financial results. “It really will democratize the access to financial and other business information,” Taylor said.
“Once it becomes more generally accepted and adopted, everyone that is an investor will be able to analyse it as quickly as others.”
The Canadian XBRL taxonomy comes at a time when accounting scandals have destroyed the reputations of high-profile firms both here and in the U.S., said George Farkas, president of XBRL Canada.
The standard, he said, should help firms across the business community put the principles of transparency and good governance into practice when they distribute information electronically.
The Canadian taxonomy has been approved by XBRL International and will be available on a recently relaunched version of the XBRL Canada Web site.
