Securities regulators, accountants, analysts, investors, bankers, tech workers and even the guy who wrote Wikinomics were in Vancouver last week to promote the extensible business reporting language (XBRL).

Although only one Canadian company has filed financial statements with the Canadian Securities Administrators (CSA) in XBRL since the CSA began a voluntary filing program in May, it’s widely accepted that the technology will succeed the PDF as the standard filing medium for financial reporting. “The big opportunity here is to make the transfer of business information much easier,” said Alastair Nimmons, a director with PricewaterhouseCoopers LLP, and a member of the XBRL Canada Steering Committee.  “[XBRL] has the potential to make business reporting more transparent and even things out between large corporate users of information as well as smaller retailer investors.” While a PDF document is static, its XBRL equivalent is fluid. At its most interactive, it has the characteristics of a web page rather than a flat document. On a XBRL document, users can “tag” revenue, sales and other information with metadata. The metadata can include RSS feeds, web links and detailed explanations and instructions. With the right program, an analyst or investor could quickly extract information from multiple financial statements onto a spreadsheet or chart to, for example, compare and contrast companies in a single sector.

In September, Newstrike Resources Ltd. became the only Canadian company to file its financials with the CSA in XBRL. Canadian companies are still required to file in PDF format even if they voluntarily file in XBRL. About 60 companies, including industry leaders such as Microsoft, Business Objects and Lockheed Martin, have submitted XBRL filings to the SEC since the securities regulator began its voluntary filing program in 2005.

During last week’s conference, SEC chairman Christopher Cox announced a new U.S. GAAP (generally accepted accounting principles) taxonomy that standardizes XBRL financial reporting for all listed companies. The new taxonomy, as well as the presence of Cox – who has been a vocal XBRL proponent – at the XBRL conference in Vancouver, should be a wake-up call for the roughly 200 Canadian companies that file in Canada and the U.S., said Diane Mueller, chair of the 16th XBRL International conference held here in Vancouver and vice-president of XBRL development at JustSystems Canada in Vancouver.  “We believe very strongly that within the next year it’s going to be mandated that when they report in the U.S., they are going to have to use XBRL,” she said.

Around the world, many government agencies and securities regulators are adopting the international financial reporting standards (IFRS), which is being promoted as a single accounting standard for all countries to use and is compatible with XBRL. Canada has committed to replace its accounting principles with IFRS by 2011.

In November, the SEC began allowing foreign companies to file using the IFRS taxonomy without having to file a second set of financials using the U.S. GAAP.  Canadian companies that file in both Canada and the U.S. may consequently no longer have to reformat Canadian GAAP to U.S. GAAP.  But Canada and the U.S. lag behind many countries in embracing XBRL as the standard format for financial filings. Stock exchanges in China and Japan have implemented XBRL. More than 125,000 companies in the United Kingdom are voluntarily reporting to regulators in XBRL.  Governments in New Zealand, Australia and the Netherlands have all committed to moving towards a single XBRL filing standard for all government entities. “That’s the model that we’re really encouraging the Canadian government to follow,” said Mueller. “They don’t share a common metadata language – a common way to talk about information.  “XBRL is just the technology underlying a general movement and convergence that’s going on between accounting and technology.” •

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