 "XBRL standard can help govt's digital agenda: John Turner")
John Turner, chief executive officer of XBRL International, tells Sahil Makkar that his non-profit organisation is committed to making a paradigm shift from print to digital when it comes to filing financial and compliance reports to regulators and government agencies. However, only a few thousand companies in India are currently using the XBRL standard. Edited excerpts:
What is XBRL and what does it mean for India?
XBRL is the global standard for exchanging financial, compliance and risk data between organisations. The framework is in use in 60 countries, millions of companies, and by 100 regulators for defining, collecting and validating reporting information in digital format. So, we are moving people from paper to digital.
In India, the use of XBRL is well advanced at the Reserve Banks of India (RBI), but it is still relatively early days for the other parts of the economy. The opportunity for India is to ease the way you do business by making it easier to understand corporate performance, and the risks and opportunities associated with specific companies that you might be dealing with. This goes very much to the Indian government's digital agenda, and it is what XBRL is for: enhancing business performance by improving transparency and accountability through the use of digital data exchange.
XBRL was introduced in India in 2008, but not many use it in the country...
Every country makes its own decisions about how quickly it wants to move away from paper to data. The decision is taken after factoring in needs of the economy and pressures of different stakeholders. The cost of moving from paper to data is so low that it's time for India to do so.
If you say the cost is negligible, what is preventing companies in India from walking this path?
The cost is dependent on the arrangements that occur with the individual accounting packages. But, in other countries, the cost could be free because it is just an upgrade associated with the accounting package or it could be priced between $50 and $70.
What opposition is the government facing in its implementation?
This is a question of what people can do with the standards and how they can benefit from the resulting transparency. It takes time to move from a document-based paradigm to a data-oriented one. This is a win-win for regulators, companies and the government.
How many Indian firms are using XBRL?
Around 30,000 companies are using XBRL to file their statements with the ministry of corporate affairs. The practice is restricted to bigger firms. It is mandatory for the banks to use XBRL for reporting their risk returns to the RBI. There are 30-40 software companies that are supporting the XBRL standard in India.
What are the fears of small companies that refuse XBRL?
I doubt if smaller companies fear XBRL - they probably don't know about it. In many ways, that's what you want: you want the standards and supporting technology to be invisible to the end user. Ideally, companies should be able to complete their reports directly from their accounting packages, review them and submit them to the relevant authorities, confident that the data is accurate and that it can be reused.
Why is the government not making it mandatory for companies to file reports using XBRL?
The RBI has made it mandatory and every bank in India is using this. The RBI has moved beyond the paper paradigm. It gets structured data. The corporate affairs ministry is considering ways in which it can take better advantage of the XBRL standard in line with the government's Digital India initiative.
How does the structured data help the RBI?
Getting data in electronic form means the RBI won't need to rekey information and can expand its time on analysis - helping ensure its supervisors are looking at the right banks. The RBI is doing some very interesting things with its XBRL data, including collecting data about non-performing loans and sharing information with the rest of the banking sector. This is a very practical way of making the financial system safer. It ensures a company that might be under financial pressure, and is failing to pay back its loan in a timely manner, is not able to borrow money from other banks. It relies on accurate, timely and electronic data collection and it is really sensible use of XBRL.
What is XBRL and what does it mean for India?
XBRL is the global standard for exchanging financial, compliance and risk data between organisations. The framework is in use in 60 countries, millions of companies, and by 100 regulators for defining, collecting and validating reporting information in digital format. So, we are moving people from paper to digital.
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XBRL was introduced in India in 2008, but not many use it in the country...
Every country makes its own decisions about how quickly it wants to move away from paper to data. The decision is taken after factoring in needs of the economy and pressures of different stakeholders. The cost of moving from paper to data is so low that it's time for India to do so.
If you say the cost is negligible, what is preventing companies in India from walking this path?
The cost is dependent on the arrangements that occur with the individual accounting packages. But, in other countries, the cost could be free because it is just an upgrade associated with the accounting package or it could be priced between $50 and $70.
What opposition is the government facing in its implementation?
This is a question of what people can do with the standards and how they can benefit from the resulting transparency. It takes time to move from a document-based paradigm to a data-oriented one. This is a win-win for regulators, companies and the government.
How many Indian firms are using XBRL?
Around 30,000 companies are using XBRL to file their statements with the ministry of corporate affairs. The practice is restricted to bigger firms. It is mandatory for the banks to use XBRL for reporting their risk returns to the RBI. There are 30-40 software companies that are supporting the XBRL standard in India.
What are the fears of small companies that refuse XBRL?
I doubt if smaller companies fear XBRL - they probably don't know about it. In many ways, that's what you want: you want the standards and supporting technology to be invisible to the end user. Ideally, companies should be able to complete their reports directly from their accounting packages, review them and submit them to the relevant authorities, confident that the data is accurate and that it can be reused.
Why is the government not making it mandatory for companies to file reports using XBRL?
The RBI has made it mandatory and every bank in India is using this. The RBI has moved beyond the paper paradigm. It gets structured data. The corporate affairs ministry is considering ways in which it can take better advantage of the XBRL standard in line with the government's Digital India initiative.
How does the structured data help the RBI?
Getting data in electronic form means the RBI won't need to rekey information and can expand its time on analysis - helping ensure its supervisors are looking at the right banks. The RBI is doing some very interesting things with its XBRL data, including collecting data about non-performing loans and sharing information with the rest of the banking sector. This is a very practical way of making the financial system safer. It ensures a company that might be under financial pressure, and is failing to pay back its loan in a timely manner, is not able to borrow money from other banks. It relies on accurate, timely and electronic data collection and it is really sensible use of XBRL.