Finance departments of global companies have been confronting a rolling set of costly deadlines around the world as different countries have enforced the filing of corporate returns in the XBRL (eXtensible Business Reporting Language) format. This, the new “lingua franca” for business reporting, ensures data is not only independent of any underlying application or database but is also tagged using a standard description and classification system.

For most financial controllers, converting existing documents into this new format and adding XBRL to ongoing processes is being viewed as a burdensome and expensive compliance overhead that will provide little or no value to the business.

But the switch to XBRL reporting can be beneficial in the long term and should not be seen as a one-off event designed to satisfy government bean counters. Forward-thinking CIOs are highlighting how a strategic approach to the adoption of XBRL presents an opportunity to deliver new levels of data consistency, transparency and automation. The result is a vast improvement in the financial information that forms the basis of business decisions. In fact, the earlier in the cycle that data becomes XBRL-conformant, the greater the opportunity there is for business-enhancing analysis, planning and forecasting.

At the same time, the filing of accounts and computations in XBRL does not mean accounting processes have to be re-drawn: it is only the final report figures that need to be in the new format.

Nonetheless, the progressive adoption of XBRL in a considered, strategic way will result in a step-change in the quality and efficiency of financial reporting, and Fujitsu’s experience with international clients suggests a four-phase approach works well:

• Consider the overall reporting architecture and select a suitable XBRL conversion package, while considering how it will fit with future plans for a central XBRL repository
• Start top-down with the compliance requirement to submit financial documents
• Introduce the XBRL standard into the organisation at a corporate level, then to divisions and departments
• Introduce (or turn on) XBRL-based business intelligence capabilities in your organisation.

Clive Keyte is applications strategy director at Fujitsu UK & Ireland.

See also a longer version of this article.

Data feed

• From 15 June 2011 all US public companies will be required to file financial statements to the SEC in XBRL; the mandate in the UK kicks off in April 2011.

• Other countries that require or are trialling XBRL financial reporting include: Australia, Belgium, Canada, China, Denmark, France, Germany, Ireland, Israel, Japan, Korea, Luxembourg, the Netherlands, New Zealand, Norway, Singapore, Spain, Sweden and Thailand.