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XBRL as a Tool to Help Move to IFRS

In an article written by CFO Magazine Data-Tagging: New Push for a Global Standard, Gargi Ray, manager of technical accounting for global outsourcer Infosys says the following:

"XBRL aligns data with broad concepts, such as revenue, which seems to have helped the conversion to IFRS. Aligning accounting concepts that match up with IFRS concepts makes the migration to the international standards relatively easy compared to migrating spreadsheet-based financial statements"

People have talked, and talked, and talked for years about creating a mapping between IFRS and US GAAP using XBRL.  From what I hear, there is at least one Big 4 CPA firm which is already creating what amounts to a mapping between IFRS and US GAAP.  Whether they will make this mapping available to others is not understood.

I don't understand why the SEC, AICPA, the FASB, or the IASCF has not seen fit (or realized how helpful) such a mapping would be to the process of moving from US GAAP to IFRS enough to actually coordinated the creation of such a mapping which could be made available to everyone.  Seems that it is in their interest if they want people to make this move.

There are people who both understate and overstate the difficulty of creating such a mapping.  And frankly, I personally would not really call this a mapping, but rather a "mapping reconciliation".  Seems to me that the difference between IFRS and US GAAP is quite similar to the difference between tax accounting and US GAAP (i.e. external reporting).

Even better than a mapping/reconciliation would be a Wiki which provides this information.  Combining the characteristics of XBRL, the characteristics of a Wiki, and characteristics and functionality of the Web would create a very powerful tool, seems to me.

You could even take this one step further and create a physical reconcilation template using XBRL which any company could use to articulate their financial information in BOTH IFRS and US GAAP and show every reconciling item between the two sets of numbers.  That would help accountants see the real value of XBRL and also help the transition to IFRS.

Posted on Thursday, February 5, 2009 at 08:22AM by Registered CommenterCharlie in , , | Comments1 Comment

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Reader Comments (1)

Brilliant as always, Charlie. There are always the same challenges, including: 1) Getting people to understand the method and meaning of the move from documents to data, and 2) Getting people to understand that while automation may eliminate some types of billable hours, it empowers experts to add more value internally and the market to add more value externally -- in multiple ways ranging from accuracy to speed to prioritization to convenience to understanding. Yes, there is hard work required, but it's important work -- and it's important that urgent work not displace important work. Can you imagine how many resources might be put to higher and better uses if the time required to produce GAAP, IFRS, tax, and performance reporting were reduced even a little bit using processes like you describe? Thanks to your work, we'll get there faster.
February 6, 2009 | Unregistered CommenterPaul Wilkinson

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