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TechTalk Blog - Regulatory Oversight, Blockchain and XBRL and How They Work Together to Support an Accountable and Transparent Capital Markets to Protect Investors and Taxpayers

By David Colgren posted 08-15-2018 01:20 PM

  

Alarmed by blog article being published that says XBRL is obsolete and XBRL data tagging within financial and business reports will be replaced by Blockchain. The blog goes on to say -- As reported in this article from Bloomberg BNA, speakers at the American Accounting Association conference held this week, including a FASB member and accounting technology experts, appear to have been downright hostile to XBRL (eXtensible Business Reporting Language). The blog basically said that XBRL is obsolete and XBRL will be replaced by Blockchain...

In January 2018, I wrote an article in Strategic Finance Magazine about XBRL and Blockchain and how they are linked together to support better transparency and accountability.

Today – more than 100 different regulators in 70 different countries (including the US SEC and the US FDIC are using the global data XBRL tagging of data standard ) for millions of company disclosure documents (more than 2/3 of the capital markets are using XBRL for disclosure)  for regulatory reporting for better data analytics to protect investors and taxpayers.

The Financial Reporting Council - which oversees the UK Securities Marketplace - published a great white paper on: “XBRL Deep Dive – Digital Future of Corporate Reporting” in December 2017 that talks about the benefits of XBRL and the relationship between XBRL and the build-out of Blockchain.

In June 2018 – building on the XBRL white paper the Financial Reporting Council published a white paper: “Blockchain and the Future of Corporate Reporting – How Does it Measure Up”…

In the coming months the FRC plans on issuing two additional white papers – “Artificial Intelligence” and “Augmented and Virtual Reality”…

Point: One of the world’s largest securities regulator – UK Financial Reporting Council - clearly sees the logical progression of XBRL + Blockchain + AI + Augmented and Virtual Reality to the FUTURE OF CORPORATE REPORTING…  Taking XBRL out of this logical progression would SET BACK the logical technological progression of financial reporting build upon the need for structured data such as XBRL

There is a reason why the UK FRC started with a white paper on XBRL before their next white paper on Blockchain … In order for Blockchain technologies to work – smart contracts, distributed ledgers, etc. -- they will need to be able to rely on a wide range of high quality structured data contained within documents (PDF), including XBRL documents prepared by companies using a global standard created by – and used by the accounting, audit marketplace - for better accountability and transparency to protect millions of investors and taxpayers around the world. Transparency and accountability is critical in making business decisions supporting a thriving capital markets. A thriving capital markets creates innovation and new jobs. Fundamental to Democratic political structures is a thriving, open, transparent capital markets using new technologies that support better DATA ANALYTICS and PREDICTIVE ANALYTICS by using structured data.

WHAT IS STRUCTURED AND UNSTRUCTURED DATA? Why is structured data important?
 
As John Turner, CEO of XBRL International recently stated:  

  1. Disclosure must be structured.
  2. That structured disclosure needs to come from management, in order to create the veracity that markets need.
  3. Audit of those structured reports needs to become a key part of external review.
  4. Companies need to think at least in terms of “Disclosure Management” systems, but in reality need to tag as far up the reporting process as practical.

XBRL is the fundamental building blocks needed for blockchain technologies to be interoperable and machine-readable using structured data defined and used by the accounting and auditing marketplace – linked to accounting definitions and terms. Sending PDFs across the world requiring users to go in and read the documents which is time consuming and not efficient. Using XBRL tagged PDF documents makes this data exactable and machine-readable for instant diagnostics. Blockchain will contain PDF but these PDF documents will NOT BE USABLE UNLESS THEY CONTAIN STRUCTURED DATA TAGGED TECHNOLOGIES LIKE XBRL.


Structured electronic reporting:
 Facilitates user-driven data standardization and improves comparability
 Facilitates user-driven data standardization and improves comparability
 Provides computer-readable and complete disaggregation of disclosures
 Improves efficiency

 
Below are reference documents including my own about the relationship of XBRL to Blockchain technologies:

Blockchain: A Business Case for XBRL: A Beast or Lame Duck  

Great presentations made by both XBRL International and XBRL US about the relationship of XBRL to Blockchain technologies and how they coexist and will flourish as Blockchain gains momentum. 

XBRL and Blockchain and the critical relationship between both technologies… 

Great presentation on how XBRL is critical to the development of Blockchain technologies.

Summary

XBRL will not become obsolete – it is the core building blocks to structured data that will be contained within blockchain (smart contracts and distributed ledger) for better data analytics for decision making to mitigate risk and protection of both investors and taxpayers to support a thriving/expanding assured capital markets.   

 For effective data analytics to work, stakeholders will need to be able to rely on a wide range of high quality structured data, including XBRL documents prepared by companies to effectively oversee the capital markets. Pushing back XBRL or jumping directly to Blockchain without structured data contained within financial reporting will not improve transparency or accountability. Using a data standard supported by accounting and audit standard bodies – FASB and IASB and possibly IPSASB (for government reporting on a global basis) XBRL – we have data linked to accounting and audit principles that can eventually be assured to protect the public. Moving from paper reporting to data reporting is the way to go and the next logical progression is to take this technology and utilize it with Blockchain (Smart Contracts and Distributed Ledgers)… Moving Forward – NOT BACK in time.


Come to DATA AMPLIFIED IN DUBAI NOVEMBER 13-15, 2018 to hear more about XBRL and its important relationship to Blockchain, Regulatory Oversight, Data Analytics and Better Corporate Governance / Better Government Oversight of Financial Operations...


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