In December 2016, the European Securities and Markets Authority (ESMA), the European Union agency responsible for the regulations that govern securities and the conduct of public markets within the EU, announced that starting January 1, 2020, public companies that prepare consolidated IFRS financial statements will provide them in the structured format XBRL.
ESMA is in the process of developing the detailed technical rules, will field test their system, and will submit the details of their proposed solution to the European Commission for endorsement by the end of 2017.
What does that mean? Well, it seems to mean that another 10,000 or so listed companies will be reporting using XBRL-based structured information. ESMA will be using Inline XBRLwhich basically XBRL embedded within XHTML. The SEC will likely move to Inline XBRL also.
Hopefully the ESMA will learn from the SEC experiences with XBRL and avoid the quality issues encountered in the XBRL-based public company financial reports. Time will reveal the answer. One advantage of Inline XBRL is that it helps separate the presentation of information (in the XHTML) and the representation of information (in the XBRL).
What will software vendors do? Will they build more bolt-on solutions to the current barbaric processes and procedures for creating financial reports or will they innovate and create intelligent XBRL-based digital financial reports using improved processes that truly leverage the technology? Will the quality pivot and the cost pivot occur?
Has the maturity levelof XBRL taxonomies, creation software, business rules available, and the knowledge of business professionals reached a point where the pieces can be put together appropriately?
Will Europe lead? Great opportunity to re-think financial reporting processes, bringing them out of the dark ages. Time reveals all.