Lou Rohman, Vice President, XBRL Services, Merrill Corporation | December 08, 2016
I saw technology intersect several times with SEC filers that use IFRS (International Financial Reporting Standards) during the 2016 Conference on Current SEC and PCAOB Developments on December 5-7 in Washington DC. But despite this, SEC IFRS filers still aren’t required to submit financial statements using XBRL, a technology format that provides tagged financial data, allowing software to efficiently consume the data.
Caution! This doesn’t mean that IFRS companies should give the brush-off to filing XBRL with the SEC, rather just the opposite. The comments at the conference point to the increasing likelihood that XBRL will soon be mandated by the SEC for IFRS companies. When? That’s undetermined, but everything points to soon, very soon.
The Intersection of Technology, IFRS Reporting and SEC XBRL
IASB Chairman Hans Hoogervorst spoke about the “new era of information gathering and consumption.” It was evident that he is committed to the quality of electronic financial reporting, including the IFRS Taxonomy. Click here for his speech.
SEC Chief Accountant Wes Bricker emphasized the importance of IFRS and quantified the magnitude of companies filing with the SEC that prepare financials in accordance with IFRS – 525 companies with an astonishing $7.3 trillion of market capitalization as of September 2016. The amount was surprising enough that it lit up Twitter for a while (not to mention that there was a real sparrow flying high above the stage during the day, that could be heard literally tweeting during the speeches). Click here for his speech.
And regarding technology Bricker said “the SEC’s website received over 7 billion page views — which is more than some major media sites. The SEC delivered two petabytes of data through the site, which by today’s standards is enormous. Over the past month, there have been more than 50,000 views of EDGAR filings per day from mobile devices. This suggests to me that market participants are seizing on opportunities to gather information from filings available on EDGAR. Anecdotally, I also sense that some of those participants then aggregate, normalize, and distribute the information as a service to investors and others.”
Bricker pointed to the significance of the evolution of technology and its effects on financial reporting. He said there are implications on individuals entering the accounting profession. And I expect he would agree with me that, based on how fast financial technology is moving, the implications are just as significant for individuals currently in the accounting profession.
As if that wasn’t enough, Deputy Chief Accountant, Julie Erhardt dug deeper into XBRL and addressed the importance of the digital financial reporting change at the SEC over the last 7 years. She specifically mentioned the balance of standardization versus the specific nuances between individual reporting companies. It was revealing to hear her views on the importance of tagged data. Click here for her speech.
IFRS reporting, technology, and SEC XBRL all intersected at the conference. Conversations on this topic with conference attendees usually ended with “we’ll have to wait to see when the SEC mandates XBRL for IFRS companies.” Based on recent SEC speeches and seminar topics, keep your eye on this one, the wait is likely a very short one.